A Guaranteed Pension Income At Age 60 With Built-In Growth Potential
Do you have a defined benefit pension plan? If not, we can create your very own pension plan with a guaranteed retirement income for life. If you are fortunate enough to still have one through your employer, will the income from it be enough to meet all your retirement spending needs? We can help solve that problem by using a Guaranteed Minimum Withdrawal Benefit (GMWB) program, such as the one provided by Empire Life, Class Plus 3.0.
These retirement products are rare, and most of them have been taken off the market since their debut in 2006. With Class Plus 3.0, you will get a guaranteed 4% annual income base bonus every year you don’t make a withdrawal (Empire reserves the right to increase it but can’t decrease it; the bonus was 5% in 2018 and 2019). These bonuses will help increase your income base, which is what Empire would use to calculate your income in retirement using the percentages below. Also, if the market value is higher than your income base, it becomes your new income base as the product has an automatic reset every 3 years up to age 80. When the product is owned in a RRIF/LIF, it pays the higher of the legislated RRIF/LIF minimum, or the guaranteed income. In other words, the insurance company removes the downside risk to your income, but you do retain the upside potential:
Is a GMWB right for me?
Whether you are already retired or saving for retirement, this asset class may be the solution for you. It can be held in any type of account; RRSP/RRIF, LIRA/LIF, TFSA, Open Accounts… Please find attached some pieces you might find useful, and below a couple videos that explain how the product works in the accumulation or the income phases.
If you are retired with a GMWB, you’ll know exactly how much monthly income you will receive, every year, for life. If your retirement is some years away, you can invest in a product like Class Plus 3.0 today and use it to accumulate wealth before you start withdrawing income. We have a lot more information on this type of asset class, so feel free to contact our office and we can walk you through your personal planning, using your own numbers.
