Betting on a long life?

A look at the risks and rewards of retirement annuities.

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If you’re heading into retirement age but still planning to stay alive for some time to come, you may want to consider longevity insurance (a.k.a. annuities).

The Financial Post’s Jonathan Chevreau describes the slightly morbid but potentially lucrative arrangement thusly: “Insurance companies… pool mortality risk with thousands of other policyholders. If you beat the odds and “win,” the money paid to you comes from other retirees who died earlier than expected.”

Of course there are arguments to be made for other means of retirement income, like converting your RRSP to a RRIF, which provides provide access to capital, deferred taxes and more freedom in bequeathing an estate. But, a RRIF can’t provide guaranteed income.

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