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Your Retirement Income Blueprint: A Six-Step Plan to Design and Build a Secure Retirement by Daryl Diamond

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The Tax-Deferred Annuity

This is not a stand-alone product, but a proven strategy that is designed to address three key objectives for retirement income. It is difficult to generate meaningful guaranteed income in the current low-interest-rate environment. That is further complicated if non-registered assets are creating fully-taxable interest income. And although there is a need for some growth in assets during retirement to address inflation, there is also a bit of lingering trepidation regarding the stock markets after the disaster of 2008 and early 2009. This concept involves combining two of the special tools we have just looked at, the prescribed annuity and corporate class funds. By using these two vehicles in tandem, you can realize the following:
• guaranteed income
• the potential for tax-deferred growth
• a tax efficient-strategy for the above objectives
The example I’m going to use involves a female, age 70, who has just had a non-registered GIC or bond mature for $100,000. She wants guaranteed income but also realizes that there is a need for some growth in her assets. She does not want to purchase a life annuity because she wants to preserve her capital. An insured annuity is not a consideration since she is not able to acquire life insurance. Ideally she would also like to see less tax on her income. She has a 31 per cent marginal tax rate and the GIC renewal rate is 3.5 per cent. Here is how the strategy compares in her situation:
TABLE 10.7: The Tax-Deferred ...

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