By Ted Wernham BA CLU CFSB EPC, Retirement Income Manager, Wernham Wealth Management Inc.
So many of us are caught between the volatility and loss in the Markets, and the scarcity of interest available in “safe “investments!
In order to maintain an adequate income in retirement, capital is eroding faster than lakeshore ice, this month!
You should know about a solution that will produce more monthly income and result in less tax payments, than what you are doing currently.
Consider this opportunity!
Let us suppose that you are retired, and have $100,000 to invest (easy to multiply or divide to suit the circumstances). After a diligent search of interest rates payable on a one-year GIC, you are fortunate enough to find a return of 1.5%.
Retirement income is more important than retirement assets!
Unfortunately, assuming a marginal tax rate of 30%, your net after-tax income generated from this $100,000 is only $1,050. For every $1,000 of annual income you will need about $100,000 of capital.
So, let us increase your after-tax income! Instead of buying a GIC, invest in a prescribed annuity contract.
The monthly income payout, guaranteed for life, could be approximately $8,069 annually. Only $133 of that amount is taxable, so at 30% that would be $39.90 of tax. Helps prevent the Clawback of your Old-Age Security, doesn’t it?
By direct comparison, this is a much higher annual payout than an interest-bearing investment, by over seven times.
Your original capital is paid out over the course of your lifetime. If the kids are important to you, and you want to leave them the original $100,000, instead of spending it, we can help with that, also!
You could purchase a $100,000 life insurance policy with the extra cash flow you’re receiving on the annuity each year, to replace the capital. The annual premium could be $4,000 annually, payable for life.
So let’s do the math. The prescribed annuity pays out $$8,029.10 annually after taxes. Now use $4,000 of this to pay for the insurance annually. You are still left with $4,029.10 after taxes and insurance costs.
This still beats the $1,050 from that GIC, by $2,979.10.
That results in a bottom line 283% more money, guaranteed, every year, for you, by investing with us.
About Ted Wernham
Entering his 42nd year of professional service, Ted Wernham BA CLU CFSB EPC is recognized as the #1 Investment Advisor in Canada, of 6000 associates. He has earned recognition as one of the highest ranking members of MDRT, the Premier Association of Financial Professionals, worldwide. He is the host of Bell Media’s “Retirement Ready Radio”, heard weekly. His firm has been nominated for the London Chamber Of Commerce Business Achievement Award, 2015, and the Better Business Bureau Integrity Award, 2015. He was a Director, Canada, Of the Canadian Initiative for Elder Planning Studies, and is a frequent speaker recognized as an expert in retirement income. Ted and his wife Earlene are parents to eight, and grandparents to six.