No matter how far you are from retirement, it's good to know how to turn your savings into retirement income

There are three ways to do this:

• Annuity
• Registered retirement income fund (RRIF)
• Life income fund (LIF)

What are annuities?
An annuity is the simplest retirement income option that gives you guaranteed and predictable income. To buy an annuity, you sign an agreement with a life insurance company and make a one-time payment. The income you get depends on the features you choose, your age and the interest rate when you buy your annuity. With annuities, you don’t have to do anything. Just wait for the payments. There are no investment decisions and no investment risks. However, because there’s no growth potential for your savings, your payments may not keep up with inflation unless you choose an indexed annuity. Always remember that the guaranteed income from an annuity isn’t flexible. If you decide later on that you need a different amount of income, you can’t change your agreement nor your annuity.

What are RRIFs and LIFs?
RRIFs and LIFs are registered income plans that can provide a steady stream of income. These options give you control over your investments so you can hold a variety of funds with potential for growth. RRIFs are for savings currently in RRSPs while LIFs are for savings in locked-in retirement savings plans. The money held in a RRIF or LIF grows tax deferred. Both accommodate larger withdrawals. The income from these funds also offers flexibility. You can vary them every year to meet your changing needs. However, this depends on minimum and maximum amounts set by the government.

You don't need to choose just one
Combining a RRIF or LIF with an annuity gives you both guaranteed income and more control over your investments. Since an annuity’s income stream is fixed, it may be a good way to cover your day-to-day living expenses. With this guaranteed income in place, you can pay for extra items with your RRIF and LIF. Annuity payments and RRIF or LIF withdrawals are taxed as income each year. Talk to your financial advisor or contact Canada Life to help you decide which retirement income options are right for you.