Are your RRIFs going to run out in this low interest rate environment? They don't have to. Read on...

Dawn Luhning |

Hi all. It has been a while since I posted a blog and I apologize for that. My office took a two week holiday mid-July and I'm just getting back into the swing of things. Mind you, with the weather reaching the 30s this week, I'm not going to deny the fact that it's hard to stay 'focused' in my home office when the outside is so close!

Anyways, if you have RRIFs in term deposits or GICs currently, you must know that interest rates are very very low right now. When you are drawing your minimum annual payment from your RRIF, and you are investing in GICs or low-interest, conservative investments there is a good chance that your annual income (minimum payment) could run out. Today I did a renewal for a client with a GIC for 1 year and the rate was ... 0.73%! RRIF annual withdrawals range anywhere between 5 and 7% depending on your age. You can see with this rate differential that there is not much room before the capital/principal/your savings will be fully depleted.

You do have another option. You can invest in a segregated fund with guarantees. It also has a guarantee to pay you a minimum annual payment until the day you die. Whether or not you have any funds in the account! Sound too good to be true?

Well it is true. Empire Life has a product just like this that will pay you your minimum annual RRIF payment OR the guaranteed annual minimum payment for life, whichever amount is higher. A further bonus is an investment like this may bypass probate when a beneficiary is appointed.

I'll let the video speak for itself (see below). If you have investments at the bank or elsewhere invested in GICs or high-interest savings or term deposits, it would benefit you to have a conversation about this. It's an option. That's all. You can decide whether it will work for your situation or not. Let's chat!

ps. I've mentioned before that getting investments out of the bank is a great way to avoid probate and unnecessary estate fees. Banks often ask for probate which is not necessary if you are invested in this type of investment. Why pay probate fees when you don't have to?