Your DC pension options at retirement

2 options when you retire

In Ontario, you have the following optionsOptions An investment that gives you the right to buy or sell it at a set price by a set date. The buy right is termed a “call” option, and the sell right is termed a “put” option. You buy options on a stock exchange.+ read full definition for your defined contribution (DC) pension planDefined contribution (DC) pension plan A registered plan that tells you how much your company will save for you in a personal account. The amount is based on how much you make every year. The best deal is where you can contribute to and your employer matches your contribution. Also known as a money purchase plan. Note: DC plans don’t…+ read full definition when you retire:

1. Transfer to an individual locked-inLocked-in An account that you cannot take money out of until you retire. In most cases, you can’t get a cash payout. Your plan may make exceptions if you have a terminal illness, or a small pension benefit.+ read full definition income fund (LIF) – In Ontario and most provinces, these funds require you to withdraw income each year between certain minimum and maximum amounts. While you have some flexibility in how much you withdraw each year, these funds are structured to ensure that you have retirement income that lasts your lifetime.
2. Buy an annuityAnnuity A contract usually sold by life insurance companies that guarantees an income to you or your beneficiary at some time in the future. An annuity is a contract with a life insurance company. When you buy an annuity, you deposit a lump sum of money, and the insurance company agrees to pay you a guaranteed…+ read full definition from an insurance companyInsurance company A company that sells insurance products. Some companies sell only life insurance. Some sell only property insurance. Others sell all types of insurance.+ read full definition – This is a contractContract A binding written or verbal agreement that can be enforced by law.+ read full definition that guarantees to pay you an income for life. Once you buy the annuity, you don’t have to make any investmentInvestment An item of value you buy to get income or to grow in value.+ read full definition decisions or manage your savings in any way. Learn more about annuities.

Another option: Put money in both

Consider using some of your money to buy an annuity and transfer the rest to a LIF. You can also use LIF savings to buy an annuity at any time in the future, if your need for guaranteed income increases as you get older.

Key point

2 pensionPension A steady income you get after you retire. Some pensions pay you a fixed amount for life. Others save up money for you while you are working. You use that money to create income after you retire.+ read full definition options at retirement:

1. Transfer to a LIF
2. Buy an annuity