What financial solution is right for you?

Did you know one in four pre-retirees is not saving for retirement on a regular basis? On average, only 11% have a goal or dollar amount in mind that they need to have saved or invested, so that they’ll have enough money to live comfortably in retirement.*  Take a look at your investment options and compare an RRSP versus a TFSA, RRIF and annuity.

Product

RRSP

Best for

High-income earners to save for retirement

Investment length

Long term

Pros

  • Contributions are tax deductible
  • Tax deferral

Cons

  • Withdrawals are taxed at your marginal tax rate in retirement
  • If in a higher tax bracket in retirement than when contributed, you will pay more tax

TFSA

Best for

Lower-income earners to save for retirement

Savings vehicle for short-term saving goals

Investment length

Short or long term

Pros

  • Money grows tax free
  • Withdrawals are tax free

Cons

  • Contributions are made with after-tax dollars
  • No tax deduction when contribution is made
  • Limits to amount you can save annually

RRIF

Best for

Retirees who want flexibility with their retirement income or the potential to earn more income

Investment length

Long term

Pros

  • Opportunity to participate in various types of investment at different levels of risk
  • Potential for higher returns and higher income
  • Flexibility in the amount of income taken each year, subject to government minimums
  • Can take additional lump sum amounts out with no maximum
  • Any balance remaining in the event of a premature death will pass to your heirs

Cons

  • Income not guaranteed
  • You could outlive your money if investment returns are not as expected
  • Regular review required to manage investments and cash flow

Guaranteed Life Annuity

Best for

Retirees who want guaranteed income for life

Investment length

Long term

Pros

  • Guaranteed income for life
  • Payment amounts can be indexed each year to keep up with the cost of living
  • Spousal benefits can be added

Cons

  • Lack of flexibility
  • Beyond spousal benefits, your beneficiaries will not receive any unused investments in the event of a premature death

Segregated funds

No matter what investment option you choose, a segregated fund can support and protect your goals. Segregated funds from The Co-operators are an excellent alternative to conventional mutual funds. Like their mutual fund counterparts, segregated portfolios offer a range of investment objectives and categories of securities including bonds, equities, and balanced funds. However, segregated funds also come with a guarantee of up to 100%** at maturity and death, making them a more secure investment option than mutual funds or stocks.

 

*Used with permission from LIMRA’s 2012 Ready, Set, Retire? Not So Fast

**Our minimum guarantee of 75% applies to RESPs and any contributions made after age 75. The Co-operators® used under license from The Co-operators Group Limited. All investment products are administered by The Co-operators Life Insurance Company. This document is for informational purposes only. See your Financial Advisor for a complete needs analysis.

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