This content is made possible by our sponsors. Submit your expert blog here.

Retirement income streams: Reconsidering annuities

Joelle Hall, retirement planning expert

As you navigate the labyrinth of retirement planning, the resurgence of annuities has sparked renewed interest among people seeking financial security in their golden years.

For years, annuities were sidelined in many investors’ portfolios because they required a considerable amount of capital for a minimal stream of income due to the low interest rate environment.

But the recent rise in interest rates has made it worthwhile to give annuities a second glance and consider their place in a comprehensive retirement strategy.


One of the most attractive features of annuities is the guaranteed stream of income, but you may not be aware of all the types of annuities and the options at your disposal.

There are three main types of annuities: life annuities, which guarantee income for as long as you are alive; term-certain annuities, which guarantee income for a fixed period; and variable annuities, which provide fixed income with potential extra income depending on market performance.

Annuities can also include additional options depending on your needs. For example, for an extra cost, some may choose a joint and survivor option for their annuity, which allows income payments to continue as long as one annuitant is alive and, therefore, maintain a stream of income for their partner even after they pass away.

Those who wish to ensure a legacy while reaping the benefits of an annuity may consider incorporating a whole life insurance policy into their overall wealth strategy. A whole life insurance policy can accumulate cash value over time that can be borrowed against tax free, and the death benefit serves as a legacy for beneficiaries that replaces the capital diverted to the annuity.

As a rule, you should view annuities as a dependable income stream that draws a line in the sand by maintaining a minimum level of fixed income. While variable annuities can offer participation in market performance, they usually involve higher costs and greater unpredictability.

Those seeking outsized performance may be better off investing in equities or riskier assets separately to avoid confusion and unnecessary costs.


The decision to incorporate annuities into your retirement plan hinges on many personal factors. If you’re contemplating an early retirement, envisioning a life that stretches well into your 90s, an annuity can serve as the bedrock of your retirement strategy, ensuring you won’t outlive your resources.

On the other hand, if you have amassed a sizable portfolio and live a modest lifestyle or have a spouse who already has a decent pension, an annuity may not be a necessity.

If you’re someone who is highly risk averse and the thought of market volatility makes you anxious, annuities are a great option for alleviating the stress of holding riskier investments.

In scenarios where markets take a downturn, an annuity can provide the baseline income necessary to maintain a decent standard of living, allowing you to sleep better at night knowing that your basic needs are covered.

Timing is another key consideration. Annuities are inherently inflexible because your capital will be tied up once you make the commitment. Generally, the prime window for evaluating annuities is when you’re approaching five years from retirement.

No one can predict all of life’s unexpected twists, but considering annuities in your later years lessens the chances of unpredictable events requiring the capital you committed to the annuity and throwing a wrench in your retirement plans.


Annuities may be a powerful tool at your disposal, but they shouldn’t be considered in isolation. For all but the most risk averse, they should complement, not dominate, a retirement strategy, ensuring that other assets are available for unexpected needs or aspirations.

With all the different types and options available for annuities and other aspects of a retirement plan, it can be overwhelming to see how it all fits together. Your first instinct may be to look for assistance, but it’s crucial to understand the credentials of your adviser and whether they are considering annuities in the broader context of your retirement strategy or if they are biased towards selling annuities because that’s all they are licensed or compensated to do.

Wealth advisers with the right credentials and expertise, and those who have a fiduciary duty to act with your best interests in mind, can evaluate the right balance of annuities and suggest financial solutions to best fit your retirement goals and needs.

Wealth should be viewed holistically, transcending the dollar figures of financial assets; it embodies peace of mind and health. With the right guidance, annuities can be a powerful tool in your toolbox to withstand the ebb and flow of markets, allowing your lifestyle to remain unaffected and your vision for the future to be clear and attainable.

This article is supplied by Joelle Hall of Hall Wealth Counsel, wealth advisor, portfolio manager, and investment advisor with Richardson Wealth.
Hall Wealth Counsel specialize in tax-efficient portfolios and planning. We help you simplify your wealth so you can do what you love with the people you care about.

The opinions expressed in this report are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Richardson Wealth Limited or its affiliates.

Assumptions, opinions and estimates constitute the author’s judgment as of the date of this material and are subject to change without notice. We do not warrant the completeness or accuracy of this material, and it should not be relied upon as such.

Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Past performance is not indicative of future results.

Richardson Wealth Limited, Member Canadian Investor Protection Fund. Richardson Wealth is a trademark of James Richardson & Sons, Limited used under licence.