The bright side of interest rate hikes: higher Guaranteed Lifetime Income

Are you a physician aged 50 or older, and want guaranteed retirement income? The Advantages Retirement Plan™ helps protect against outliving your savings.

For most, rising interest rates mean the pain of incurring higher borrowing costs. But for Advantages Retirement PlanTM members, and those who join, they offer an unexpected opportunity to secure higher guaranteed income in retirement.

With the recent interest rate increase, the Guaranteed Lifetime Income Annuity has increased its payout potential by as much as 17% in the past three months. For OMA members, this means that when you redirect part of your RRSP savings to purchasing an annuity within the plan, you can lock in higher guaranteed retirement income.

What is the Guaranteed Lifetime Income annuity?

A life annuity is a life insurance product that pays a fixed amount of income for a person’s lifetime at retirement. It’s typically used to provide regular income in retirement years while protecting your savings from market ups and downs. With market uncertainty, this may be an attractive option for physicians who want to secure a certain level of income and protect against outliving their savings.

How it works

The Guaranteed Lifetime Income Annuity is issued and underwritten by Brookfield Annuity Company and exclusively available to members of the Advantages Retirement PlanTM who are age 50 and older. Unlike retail annuity products, where you must purchase a minimum lump sum in the thousands of dollars, in the Advantages Retirement PlanTM you can choose an annuity based on how much you want to contribute, how much income you want to receive, when you want to contribute, and when you want to start receiving benefits, starting as early as age 60. As a member, you can redirect part of the RRSP savings in your plan, and make monthly contributions or a lump sum purchase. This purchasing flexibility is unique in the industry and only available through the Advantages Retirement PlanTM.

Higher interest rates mean higher retirement income

Annuity prices are based on a number of factors, like your age, sex and life expectancy assumptions, but one of the most important factors is the prevailing interest rate. In general, the higher the interest rate when you purchase an annuity, the higher your retirement income will be.

When you save in the Advantages Retirement PlanTM, you can use the online modeler to estimate your annuity benefits based on the amount you want to contribute, when you want to start receiving payments, and other features. Watch this video to learn more.

Talk with us to learn more

The fixed income of annuities can provide greater peace of mind for those who want to avoid market uncertainty as they approach retirement, but it’s important to know that when you buy an annuity, your purchase is locked in, which means it is final, and can’t be undone or cashed out.   If you’ve previously purchased an annuity, your future payouts will stay the same; but as interest rates continue to rise, this is an opportunity to consider adding additional fixed income benefits to your retirement nest egg.

To find out whether the Guaranteed Lifetime Income Annuity is right for you, book a consultation with one of the Advantages Retirement PlanTM Specialists:  

Guillermo Nafarrate
Ontario Central West
guillermo.nafarrate@oma.org

Yash Khubchandani
Ontario Central East
yash.khubchandani@oma.org