Retirement income options using your University of...
Transcript of Retirement income options using your University of...
Harvest Your SavingsRetirement income options using your University of Manitoba Group LIF/RRIF/PRIF
Agenda
1. Your retirement income needs2. Where will your retirement money
come from?3. Retirement accounts and products4. Sun Life Financial’s retirement
services
Income at retirement
What percentage of your working income will you need at retirement?
Your expenses in your retirement years
Stay the same
GroceriesProperty taxesHomeowner’s InsuranceUtility billsRent
Decrease
MortgageCost of EducationWork-related expensesPersonal TaxesDownsize homeNo RRSP Contributions
Increase
Drug CostsDental CareHobbiesEntertainmentTravelElder or dependent care
Determining your retirement income needs
Use the Annual Expenses Worksheet to help you determine your needsAdjust this to reflect your needs AND wants at retirementRemember to include the effects of inflation
How will life expectancy impact my savings?
Life expectancy
80731985
Life expectancy at birth
83782007
61591921
FemalesMalesYear Born
Sources: Statistics Canada, CANSIM tables 102-0511, 102-0025 and Catalogue no. 84-537-XIE.
868479
FemalesMalesAge 65 in
801985832007
781921
Life expectancy at age 65
Sources: Statistics Canada, CANSIM tables 102-0511, 102-0025 and Health Canada, Canada’s Seniors
Earlier and active in retirement
61.9200964.51979
Avg Age of CdnRetirees**
Year
Average 63 year old can live free of activity limitation until*
7875
Females(Years)
Males(Years)
** Statistics Canada CANSIM II SERIES V2342630 *Policy Research Initiative, Horizons, Vol. 6 No. 2, 2003
What does all of this mean?
On Average:
You’re going to live longer than previous generations
You’re going to have a longer retirement (retire early, and live longer)
You’re going to spend more of those years with your quality of life unchanged until your mid to late 70’s
More retirement savings needed to sustain you in retirement
Government Retirement Programs
Where will my retirement money come from?
Primary
Secondary
Government CPP/QPP/OAS/GIS/Allowance
Home/Rental PropertyOther Savings
University of Manitoba Retirement ProgramPersonal RRSP
For more informationCPP/OAS/GIS/Allowance - 800-277-9914 or
www.servicecanada.gc.caQPP - 800 463-5185 or www.rrq.gouv.qc.ca
Canada Pension Plan (CPP) -Overview
Designed to replace 25% of the earnings on which you contributed over your working lifeRetirement pension paid to people who are at least 60 years of age
Conditions apply in order to draw an early pensionPension is reduced if taken before age 65 and increased if taken after age 65
Need to apply (6 months in advance)
CPP - Eligibility to apply from ages 60 to 64
Stop workingNot working by the end of the month before the pension begins and during the month that it begins
OR
Have low earningsEarn less than the current maximum retirement pension amount in the month prior to starting to collect and during the month that it begins
Old Age Security (OAS) - Overview
Payable to anyone who has lived in Canada for a minimum of 10 years between the age of 18 and 65Maximum pension paid if you lived in Canada for more than 40 years between the age of 18 and 65Eligible at age 65 (must apply)Clawback provisions exist based on your other income
OAS – Clawback income threshold
If your net income is above $66,733 there is an OAS clawback (repayment) to part or all of your OAS paymentsFull OAS is eliminated when your net income is $108,090 or above
$506.75Survivor Benefit
Average
$844.58Maximum Monthly
OASCPP/QPP2010
How much might I get from the government?
$560.50/mth($6,726/yr)
$934.17/mth($11,210/yr)
$502.57/mth($6,031/yr)
$516.96/mth($6,204/yr)
$489.25/mth($5,871/yr)
Retirement income options
Retirement income options for University of Manitoba
One time unlocking of 50% of the locked-in account balance
PRRIF
Annuity(for locked-in)
Life Income Fund (LIF)
(for locked-in)
Registered Retirement
Income Fund (RRIF)
(for non-locked)
Your Account Balance
Prescribed Registered Retirement Income Fund (PRRIF) - Overview
Retirement income program where you invest your DC pension plan and draw retirement income
Your pension funds cannot be transferred to a PRRIF before the age of 55Your spouse’s consent is required
Your money maintains its tax deferred status
Minimum withdrawal amount prescribed by CRA
No annual maximum withdrawal limit
Can close anytime and take cash (less tax)
An annuity can be purchased at any time
Prescribed Registered Retirement Income Fund (PRRIF) - Overview
Retirement income options for University of Manitoba
One time unlocking of 50% of the locked-in account balance
PRRIF
Annuity(for locked-in)
Life Income Fund (LIF)
(for locked-in)
Registered Retirement
Income Fund (RRIF)
(for non-locked)
Your Account Balance
Annuities - Overview
Series of future payments in exchange for a lump sum todayIrrevocable once establishedSensitive to interest rates at time of purchaseOnce your annuitant passes on, payments will cease under most circumstancesDoes not require active managementIs not affected by financial markets
Annuity - Features
Life annuity - Annuity continues for your entire life
Joint life or last survivor - Includes your spouse and only ends once the last person diesGuarantee period - provides payments for your life and guarantees payments for a minimum period of time whether you are alive or notInflation protection – flat indexing (between 2%-4%) to protect your purchasing power throughout retirement
Call the SLF Customer Care Centre for a quote
What’s $100K worth?
$565$588$603$607
15 years10 years5 yearsNone
Guaranteed
These rates are shown for illustration purposes. They are subject to change without notice and current as of the time of writing.
Single Life Annuity
Joint Life Annuity
$514
10 years$519
None
Guaranteed
$48010 years
$480None
60%
100%
Retirement income options for University of Manitoba
One time unlocking of 50% of the locked-in account balance
PRRIF
Annuity(for locked-in)
Life Income Fund (LIF)
(for locked-in)
Registered Retirement
Income Fund (RRIF)
(for non-locked)
Your Account Balance
Life Income Fund (LIF) - Overview
Money in a LIF continues to grow tax deferred as long as there is money in the planMoney can be invested in various options (eg. mutual funds, stocks, bonds, GICs)Begin to draw a retirement income from the account
Annual minimum amount applies (from Income Tax Act) Annual maximum amount applies (from Pension Acts)
Life Income Fund (LIF) - Features
A beneficiary can be designatedUpon death, the balance of your account is transferred to your beneficiary on a locked in basisAn annuity can be purchased at any time
Call the Customer Solutions Centre at 866-224-3906 to understand your options
What’s $100K worth?
Minimum withdrawal required – at age 65 it is 4% of the market value on January 1st
Maximum withdrawal restriction – at age 65 it is 7.20% of the market value on January 1st
Minimum = $4,000Maximum = $7,200
Retirement income options for University of Manitoba
One time unlocking of 50% of the locked-in account balance
PRRIF
Annuity(for locked-in)
Life Income Fund (LIF)
(for locked-in)
Registered Retirement
Income Fund (RRIF)
(for non-locked)
Your Account Balance
Registered Retirement Income Fund (RRIF) - Overview
Money in a RRIF continues to grow tax deferred as long as there is money in the planMoney can be invested in various options (eg. mutual funds, stocks, bonds, GICs)Begin to draw a retirement income from the account
Annual minimum amount applies (from Income Tax Act) Annual maximum does not apply!
Registered Retirement Income Fund (RRIF) - Features
Can close anytime and take cash (less tax)A beneficiary can be designatedAn annuity can be purchased at any time
Call the Customer Solutions Centre at 866-224-3906 to understand your options
How Sun Life Financial can help in retirement
The University of Manitoba Group RRIF/LIF/PRIF
Due to your participation in your group plan, you can join the University of Manitoba Group LIF/RRIF/PRIFBenefits:
Investment fees are substantially lower than retail products (like you’re used to with your current group plan)Same great investment options Continued access to the Customer Care Centre and Plan Member websiteFees: No annual fee!
One of the greatest benefits of transferring your retirement savings into a RRIF/LIF/PRIF through the University of Manitoba plan is the low fund management fees you pay for your investment fundsYou’ll pay fund management fees that are significantly lower than those you would pay as an individual investor at a mutual fund company or other financial institutionThat’s the benefit of belonging to a group plan- more bargaining power than you would have on your own. That fee difference can have a large impact on the growth of your retirement income
Fee advantages
SLF Granite Funds- How they work
Each Granite Fund is linked to one of the five risk tolerance categories of the Sun Life Financial’s my money Investment Risk Profiler
You choose the fund that’s right for your investment goals and comfort level with risk
Each Granite fund is automatically re-balanced every month and professionally monitored to ensure it maintains its target mix
Sun Life Financial Granite Funds
86 to 145 points Granite Balanced Fund
146 to 190 points Granite Growth Fund
191 points for more Granite Aggressive Fund
35 points or less Granite Conservative
36 to 85 points Granite Moderate Fund
Sun Life Financial Granite Funds
Cash equivalents
Fixed Income
Canadian Equity
U.S. Equity
International EquityAllocations for illustrative purposes onlySource: Sun Life Assurance Company of Canada 2009
35 points of less
36 to 85 points
86 to 145 points
146 to 190 points
191 points or more
Asset Class FMF Range
SFU Group LIF/RRIF Fees
Money Market 0.19%Bond/Fixed Income 0.42% - 0.57%Asset Allocation 0.53% - 0.57%Canadian Equity 0.46% - 0.57%U.S Equity 0.46% - 0.53%International Equity 1.10%
Fee advantages
Retirement Savings and Benefit Specialists
Use the retirement tools available to help decide if it’s the right time for you to enter the next stage of your lifeUnderstand your retirement income products and optionsLearn about your available investment optionsArrange a retirement income payment schedule
They can help you:
Make an appointment with a Retirement Specialist to understand your options
Online Information and Tools
Retirement news and information
Retiring soon NewsletterStay up to date and informed about the news and views of retiring in CanadaQuarterly email newsletter delivered right to your inboxDiverse content like government programs, tax planning, lifestyle considerations and more!Sign up by sending an email to [email protected]
Harvest Your Savings Resource CentreWebsite containing much of the information and illustrations discussed throughout the presentationAvailable to current group plan members
Retirement planning tools
my Retirement PlannerDetermine the amount of money you need to save to reach your retirement goals
Annuity CalculatorEstimate the monthly annuity income you will receive from your portfolio
RRIF CalculatorCalculate the minimum payments required by the CRA - payments are based on your age
OAS Clawback CalculatorFind out at what income level you can expect a clawback and the reduction in OAS
Advice and ongoing support
Customer Solutions Centre’s Retirement Savings and Benefit Specialists
Dedicated to serving group plan members approaching and entering retirementLicensed to provide advice on the Group Choices productsKnowledgeable on all income and savings products (RRSP, NREG, TFSA, RRIF, LIF,) and life and health coverage options)Available toll free 1-866-224-3906
Are you retirement ready?
1. Determine your retirement income needs and desired retirement date
2. Determine if you are on track (use the Retirement Planner)
3. Make an appointment with a Retirement and Benefit Specialist if you are close to your retirement date to discuss your transition options
4. Assess when you need to draw your government benefits as you approach your retirement date
5. Make the most out of the next phase of your life!
Thank you