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The Best of the Retirement Annuities

By Compuquotes Team on October 8th, 2008

Annuity

Like everything that deals with money and savings, the best annuities that you can choose for retirement should be started early and built upon as much and as often as possible. That's a given and the part that most of us know about. However, the accumulation of funds for those golden years is a lengthy process and muddling through all the various options might seem a little daunting at first since you need to know which has the highest interest yield and which ones are the better tax shelters. You'll need to know what happens to the money if you take it out early and how much you can take out at what time when you let the product mature. There are a lot of different paths you can take, but with all the right information retirement annuities are certainly a blessing that will help you have worry free later years. Still, there is a fair amount of information that needs to be processed so that you make the right choices.

RRSP

That said, one of the old standbys that we've all heard the most about is still considered one of the best choices. Although you might find a few dissenting voices here and there, an RRSP is still considered one of the best ways to put a little money aside for retirement. There are two distinct advantages to this kind of annuity. First, all the money that is invested on an annual basis is sheltered from the taxman every year, and even earnings that are made on assets are not taxable. Therein lies two reasons for the annuities popularity.

Drawing Payments

No matter which kind of annuity that you select, there is the question of the kinds of payments that you'll eventually want to draw. Some people have planned in such a way that they start taking money out in sums from their RRSPs immediately after retirement. These are the people who have generally saved and planned that these RRSPs would carry them after age 65 for the rest of their lives with any other pensions or government sponsored plans that are in the works. Others have planned for retirement in a different manner.

Deferred Payments

These people have amassed enough cash through their working lives to defer payment from the funds, and they prefer to do that for as long as possible. They've planned even more thoroughly than the others and like the idea of the income tax deferral that these funds have. But this group needs to keep mind that these deferrals cannot go on past the age of 69. After that age, it is necessary to transfer the finds to a retirement annuity or an RRIF which is a Registered Retirement Income Fund. In this way, if your spouse survives you, they will only be taxed on the amounts as they make withdrawals.

There is one good way to ensure that the money you've saved over your working life does not wind up losing a fair portion to the taxman and that's to designate the entire amount as a charitable gift.

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