Generating income from your wealth - tax efficiently

Drawing income from your accumulated wealth is an important step for many of us - especially if you are retired and avenues for further wealth accumulation are limited. Many questions can come to your mind. How do you structure your investments? How much can you safely draw on a monthly basis without outliving your savings? What if I run out of money? There also could be tax implications and RRIF minimum withdrawals that you need to consider. We can walk you through various options available to you, so that you can make informed decisions.


Two of the common income options are:

  1. Income Funds offered by Mutual Fund companies, and

  2. Annuities offered by Insurance companies.


In the case of Income Funds, a payout ratio (eg; 4% or 6% etc.) is selected by you. Your money is usually invested into dividend paying equities as well as interest bearing bonds to generate income for the fund. If the fund doesn't generate enough income, a portion of the principal is paid out to meet the agreed payout ratio. In a down market, this could risk depleting your original investments.


For Annuities, on the other hand, Insurance companies may guarantee payments. However, the payout could be lower compared to an Income Fund because of the costs associated with the guarantee provided by the insurance company.


We will help you with these decisions. You may also want to review our retirement planning services.