retirement income options using your university of...

Harvest Your SavingsRetirement income options using your University of Manitoba Group LIF/RRIF/PRIF

Agenda

1. Your retirement income needs2. Where will your retirement money

come from?3. Retirement accounts and products4. Sun Life Financial’s retirement

services

Income at retirement

What percentage of your working income will you need at retirement?

Your expenses in your retirement years

Stay the same

GroceriesProperty taxesHomeowner’s InsuranceUtility billsRent

Decrease

MortgageCost of EducationWork-related expensesPersonal TaxesDownsize homeNo RRSP Contributions

Increase

Drug CostsDental CareHobbiesEntertainmentTravelElder or dependent care

Determining your retirement income needs

Use the Annual Expenses Worksheet to help you determine your needsAdjust this to reflect your needs AND wants at retirementRemember to include the effects of inflation

How will life expectancy impact my savings?

Life expectancy

80731985

Life expectancy at birth

83782007

61591921

FemalesMalesYear Born

Sources: Statistics Canada, CANSIM tables 102-0511, 102-0025 and Catalogue no. 84-537-XIE.

868479

FemalesMalesAge 65 in

801985832007

781921

Life expectancy at age 65

Sources: Statistics Canada, CANSIM tables 102-0511, 102-0025 and Health Canada, Canada’s Seniors

Earlier and active in retirement

61.9200964.51979

Avg Age of CdnRetirees**

Year

Average 63 year old can live free of activity limitation until*

7875

Females(Years)

Males(Years)

** Statistics Canada CANSIM II SERIES V2342630 *Policy Research Initiative, Horizons, Vol. 6 No. 2, 2003

What does all of this mean?

On Average:

You’re going to live longer than previous generations

You’re going to have a longer retirement (retire early, and live longer)

You’re going to spend more of those years with your quality of life unchanged until your mid to late 70’s

More retirement savings needed to sustain you in retirement

Government Retirement Programs

Where will my retirement money come from?

Primary

Secondary

Government CPP/QPP/OAS/GIS/Allowance

Home/Rental PropertyOther Savings

University of Manitoba Retirement ProgramPersonal RRSP

For more informationCPP/OAS/GIS/Allowance - 800-277-9914 or

www.servicecanada.gc.caQPP - 800 463-5185 or www.rrq.gouv.qc.ca

Canada Pension Plan (CPP) -Overview

Designed to replace 25% of the earnings on which you contributed over your working lifeRetirement pension paid to people who are at least 60 years of age

Conditions apply in order to draw an early pensionPension is reduced if taken before age 65 and increased if taken after age 65

Need to apply (6 months in advance)

CPP - Eligibility to apply from ages 60 to 64

Stop workingNot working by the end of the month before the pension begins and during the month that it begins

OR

Have low earningsEarn less than the current maximum retirement pension amount in the month prior to starting to collect and during the month that it begins

Old Age Security (OAS) - Overview

Payable to anyone who has lived in Canada for a minimum of 10 years between the age of 18 and 65Maximum pension paid if you lived in Canada for more than 40 years between the age of 18 and 65Eligible at age 65 (must apply)Clawback provisions exist based on your other income

OAS – Clawback income threshold

If your net income is above $66,733 there is an OAS clawback (repayment) to part or all of your OAS paymentsFull OAS is eliminated when your net income is $108,090 or above

$506.75Survivor Benefit

Average

$844.58Maximum Monthly

OASCPP/QPP2010

How much might I get from the government?

$560.50/mth($6,726/yr)

$934.17/mth($11,210/yr)

$502.57/mth($6,031/yr)

$516.96/mth($6,204/yr)

$489.25/mth($5,871/yr)

Retirement income options

Retirement income options for University of Manitoba

One time unlocking of 50% of the locked-in account balance

PRRIF

Annuity(for locked-in)

Life Income Fund (LIF)

(for locked-in)

Registered Retirement

Income Fund (RRIF)

(for non-locked)

Your Account Balance

Prescribed Registered Retirement Income Fund (PRRIF) - Overview

Retirement income program where you invest your DC pension plan and draw retirement income

Your pension funds cannot be transferred to a PRRIF before the age of 55Your spouse’s consent is required

Your money maintains its tax deferred status

Minimum withdrawal amount prescribed by CRA

No annual maximum withdrawal limit

Can close anytime and take cash (less tax)

An annuity can be purchased at any time

Prescribed Registered Retirement Income Fund (PRRIF) - Overview



PRRIF



(for locked-in)


Income Fund (RRIF)

(for non-locked)


Annuities - Overview

Series of future payments in exchange for a lump sum todayIrrevocable once establishedSensitive to interest rates at time of purchaseOnce your annuitant passes on, payments will cease under most circumstancesDoes not require active managementIs not affected by financial markets

Annuity - Features

Life annuity - Annuity continues for your entire life

Joint life or last survivor - Includes your spouse and only ends once the last person diesGuarantee period - provides payments for your life and guarantees payments for a minimum period of time whether you are alive or notInflation protection – flat indexing (between 2%-4%) to protect your purchasing power throughout retirement

Call the SLF Customer Care Centre for a quote

What’s $100K worth?

$565$588$603$607

15 years10 years5 yearsNone

Guaranteed

These rates are shown for illustration purposes. They are subject to change without notice and current as of the time of writing.

Single Life Annuity

Joint Life Annuity

$514

10 years$519

None

Guaranteed

$48010 years

$480None

60%

100%



PRRIF



(for locked-in)


Income Fund (RRIF)

(for non-locked)


Life Income Fund (LIF) - Overview

Money in a LIF continues to grow tax deferred as long as there is money in the planMoney can be invested in various options (eg. mutual funds, stocks, bonds, GICs)Begin to draw a retirement income from the account

Annual minimum amount applies (from Income Tax Act) Annual maximum amount applies (from Pension Acts)

Life Income Fund (LIF) - Features

A beneficiary can be designatedUpon death, the balance of your account is transferred to your beneficiary on a locked in basisAn annuity can be purchased at any time

Call the Customer Solutions Centre at 866-224-3906 to understand your options

What’s $100K worth?

Minimum withdrawal required – at age 65 it is 4% of the market value on January 1st

Maximum withdrawal restriction – at age 65 it is 7.20% of the market value on January 1st

Minimum = $4,000Maximum = $7,200



PRRIF



(for locked-in)


Income Fund (RRIF)

(for non-locked)


Registered Retirement Income Fund (RRIF) - Overview

Money in a RRIF continues to grow tax deferred as long as there is money in the planMoney can be invested in various options (eg. mutual funds, stocks, bonds, GICs)Begin to draw a retirement income from the account

Annual minimum amount applies (from Income Tax Act) Annual maximum does not apply!

Registered Retirement Income Fund (RRIF) - Features

Can close anytime and take cash (less tax)A beneficiary can be designatedAn annuity can be purchased at any time

Call the Customer Solutions Centre at 866-224-3906 to understand your options

How Sun Life Financial can help in retirement

The University of Manitoba Group RRIF/LIF/PRIF

Due to your participation in your group plan, you can join the University of Manitoba Group LIF/RRIF/PRIFBenefits:

Investment fees are substantially lower than retail products (like you’re used to with your current group plan)Same great investment options Continued access to the Customer Care Centre and Plan Member websiteFees: No annual fee!

One of the greatest benefits of transferring your retirement savings into a RRIF/LIF/PRIF through the University of Manitoba plan is the low fund management fees you pay for your investment fundsYou’ll pay fund management fees that are significantly lower than those you would pay as an individual investor at a mutual fund company or other financial institutionThat’s the benefit of belonging to a group plan- more bargaining power than you would have on your own. That fee difference can have a large impact on the growth of your retirement income

Fee advantages

SLF Granite Funds- How they work

Each Granite Fund is linked to one of the five risk tolerance categories of the Sun Life Financial’s my money Investment Risk Profiler

You choose the fund that’s right for your investment goals and comfort level with risk

Each Granite fund is automatically re-balanced every month and professionally monitored to ensure it maintains its target mix

Sun Life Financial Granite Funds

86 to 145 points Granite Balanced Fund

146 to 190 points Granite Growth Fund

191 points for more Granite Aggressive Fund

35 points or less Granite Conservative

36 to 85 points Granite Moderate Fund

Sun Life Financial Granite Funds

Cash equivalents

Fixed Income

Canadian Equity

U.S. Equity

International EquityAllocations for illustrative purposes onlySource: Sun Life Assurance Company of Canada 2009

35 points of less

36 to 85 points

86 to 145 points

146 to 190 points

191 points or more

Asset Class FMF Range

SFU Group LIF/RRIF Fees

Money Market 0.19%Bond/Fixed Income 0.42% - 0.57%Asset Allocation 0.53% - 0.57%Canadian Equity 0.46% - 0.57%U.S Equity 0.46% - 0.53%International Equity 1.10%

Fee advantages

Retirement Savings and Benefit Specialists

Use the retirement tools available to help decide if it’s the right time for you to enter the next stage of your lifeUnderstand your retirement income products and optionsLearn about your available investment optionsArrange a retirement income payment schedule

They can help you:

Make an appointment with a Retirement Specialist to understand your options

Online Information and Tools

Retirement news and information

Retiring soon NewsletterStay up to date and informed about the news and views of retiring in CanadaQuarterly email newsletter delivered right to your inboxDiverse content like government programs, tax planning, lifestyle considerations and more!Sign up by sending an email to [email protected]

Harvest Your Savings Resource CentreWebsite containing much of the information and illustrations discussed throughout the presentationAvailable to current group plan members

Retirement planning tools

my Retirement PlannerDetermine the amount of money you need to save to reach your retirement goals

Annuity CalculatorEstimate the monthly annuity income you will receive from your portfolio

RRIF CalculatorCalculate the minimum payments required by the CRA - payments are based on your age

OAS Clawback CalculatorFind out at what income level you can expect a clawback and the reduction in OAS

Advice and ongoing support

Customer Solutions Centre’s Retirement Savings and Benefit Specialists

Dedicated to serving group plan members approaching and entering retirementLicensed to provide advice on the Group Choices productsKnowledgeable on all income and savings products (RRSP, NREG, TFSA, RRIF, LIF,) and life and health coverage options)Available toll free 1-866-224-3906

Are you retirement ready?

1. Determine your retirement income needs and desired retirement date

2. Determine if you are on track (use the Retirement Planner)

3. Make an appointment with a Retirement and Benefit Specialist if you are close to your retirement date to discuss your transition options

4. Assess when you need to draw your government benefits as you approach your retirement date

5. Make the most out of the next phase of your life!

Thank you

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