Annuity or GIC for guaranteed income? It is not all-or-nothing
An annuity gives you guaranteed income for life, so it cannot run out no matter how long you live. A GIC gives you a guaranteed return over a fixed term, then hands your money back. Both are safe, but they protect against different things, and you do not have to pick just one.
Start with the question each one answers. An annuity is built for longevity: you hand over a lump sum and, in return, get a cheque that keeps coming for as long as you are alive. That removes the worry of outliving your savings, which is the risk people tend to underestimate. The trade-off is flexibility — once you commit, that money is generally no longer yours to redirect.
A GIC keeps you in control. Your principal is protected, you know the rate, and when the term ends you decide what happens next. The catch is that a GIC does not promise income for life. If you live longer than your ladder of GICs, you are responsible for what comes after.
So the real choice is less annuity-versus-GIC and more about which worry you most want to put to rest: running out of money late in life, or keeping access and options along the way. Your health, family longevity, other guaranteed income like CPP and OAS, and how much certainty helps you sleep all feed into it.
Many people land in the middle. You might use an annuity to cover essential expenses with income you cannot outlive, and keep GICs or other savings for flexibility, larger one-off costs, and whatever you hope to leave behind. Framing it as both, in the right proportion, often beats forcing an either-or.
An annuity insures against living too long; a GIC keeps you flexible — and a blend of the two is a perfectly good answer.
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Annuity vs. GIC: What makes sense for retiring?MoneySense ↗Have a question like this one?
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