Wants to buy an annuity

My wife and I are now retired with comfortable and indexed pensions. We are 60 and 56 years old. We wish to increase our pension income for traveling purposes by purchasing an annuity of $145,000. What yield should we expect and can you recommend any products? – R.B.

Gordon’s answer: Your yield will depend on several factors including your age, guarantees, the type of annuity, etc. At the time of writing, a 60-year-old couple applying for a joint annuity with no guarantees would receive monthly payments of between $493.32 and $522.46 for each $100,000 of non-registered money invested, depending on which insurance company you select. You can find an updated chart with this information by going to the MoneySense.ca website.

If you were both 60, therefore, you could receive as much as $757.57 a month for your $145,000. Since your wife is younger, the actual amount will be somewhat less, probably in the $735 range. That would translate into an annual yield of 6.1 per cent on your money.

Because interest rates are generally expected to rise in the next year or so, you might get a betterate if you hold off. Also, the older you are when you buy an annuity, the higher the payment.

When you do make the decision to go ahead, be sure to shop the market for the best deal. You may wish to use the services of an independent insurance or annuity broker who can obtain a number of quotes for you.