Advanced Life Deferred Annuities: A Proposed New Investment Option to Secure Income for Longer Retirement

As Canadians in general continue to live long past the onset of retirement, ensuring a stable and adequate source of income becomes more challenging. An Advanced Life Deferred Annuity (ALDA), proposed in this year’s federal budget, adds another option. To illustrate, by buying an ALDA for a lump sum at 65, a retiree can be assured of regular income beginning at age 85 for the rest of their life. This helps to protect retirees from the risk of outliving their savings. However, there are downsides in the illiquidity of the product, the loss of control over one’s investment, the loss of passing on an inheritance to beneficiaries and the chance of death before receiving any payments, all of which need to be taken into account in evaluating an ALDA.