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RRIFs and Annuities

Choosing the right annuity: Frank and Frances' story Add to ...

Frank is just two months away from retirement. He and his spouse Frances have decided to buy an annuity and are reviewing their options.

Their choices are:

  • The high-income choice: Here, they'd buy an annuity that will last Frank's lifetime only, and pay him $1,000 per month, or $12,000 a year. To get this, Frances has to sign a form that will say she has no rights to any payments if Frank dies.
  • The middle road: Here, they'd get an annuity guaranteed to last 10 years that will pay Frank $930 a month or $11,160 per year. If Frank dies within the 10-year guarantee period, Frances will get the same monthly payment until that period is over. After that, she will receive no further income.
  • The lower-income, high-security option: Here, they'd choose an annuity that will pay Frank $850 per month during his lifetime or $10,200 a year. After Frank dies, the annuity will pay Frances $510 a month or $6,120 a year until she dies.

Frank and Frances’ choices

What Frank receives:

What Frances receives if Frank dies:

The high-income choice

$1,000/month for Frank’s lifetime

No payment

The middle road

$930/month for 10 years

$930/month for 10 years

The lower-income, high-security option

$850/month for Frank’s lifetime

$510/month until she dies


They chose the security of a lifetime income for both of them, even though it pays less. They're both in good health, and look forward to enjoying a long and happy retirement together.

Content in this section is provided in partnership with Investor Education Fund, a non-profit organization founded and supported by the Ontario Securities Commission that provides unbiased and independent financial tools to help Canadians make better money decisions. To find out more, go to: GetSmarterAboutMoney.ca

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