This is a vital concern, particularly when you’re looking at 30 or more years of retired life. Drawing down the capital and investment return from a registered retirement income fund, generating income through bonds or guaranteed investment certificates (GICs) or even just gradually withdrawing money from your bank account are all ways to turn your savings into income. But all of these carry the risk of your capital running out before you die.
One way to generate an income that’s guaranteed for life is to buy a life annuity from an insurance company. You pay the insurer a certain amount of money, and the insurer commits to paying you a specified monthly amount for the rest of your life. Annuity income is not affected by market volatility, which is one reason annuities are an attractive retirement income option.