Comparing the Life Annuity and the LIF – Part 2

We continue discussing the differences between the two types of pension income: Life Annuity and Life Income Fund (LIF) for our last post: Comparing the Life Annuity and the LIF – Part 1.

Here are some more unique features of each option
Pension Annuity
- Guaranteed income for life
- No ongoing investment decisions required
- Not affected by stock market or interest rate changes
- Formal pension payments are eleible pension income
- Does not allow for inflation adjustments – other than public sector plans
- Inflexible contract ocnce purchased
- Joint annuitant cannot be changed
- Income cannot be stopped
- Not as likely to provide a benefit to the estate

- Automatically single life; no option for joint
- Ongoing investment decisions required
- Potentially higher or lower income than annuity
- You control income flow within limits
- Can be rolled back to a LIRA or locked-in RRSP if under age 71
- Spousal beneficiary able to remove “locked in” restriction
- Eligible as pension income after age 65
- Can be partially or fully converted to an annuity at any age

Although both options are both viable to use as pension income, we’ve found that the flexible nature of the LIF has made it a more attractive option.

Learn more about corporate sources of income from Daryl Diamond and his book, Your Retirement Income Bluprint.

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