Andrea Thompson

So he told me the stories about how when you had an RRSP back in the day, I'm talking, you know, 50 years ago, the only option that you had for conversion was to go to an annuity.

There was no such thing as a RIF.

RIF didn't exist.

That hasn't been the vehicle that we've now all gotten used to.

There was only the ability to annuitize.

And back in the early 80s when interest rates were really high, these instruments, you know, they sang because an annuity is an interest rate and mortality-based product that you can buy.

However, they did really fall out of favor when RIFs were introduced and advisors could manage RIFs.

And that's to say there's a lot of other reasons why annuities have fallen out of favor other than they can now be managed by an advisor and a RIF.

Interest rates have come down significantly, which does impact annuity rates in the long term.

And that stayed for a long time after 2008.

We had really, really low interest rate environment, which made annuities a little bit unfavorable if you're comparing it to market-based returns.

However, that being said, when I'm doing retirement planning for someone, the biggest drawback that I see in people's plans is when they don't have enough fixed or guaranteed pension income.

And it leads them to not want to spend their own money.

There is a gigantic fear of decumulation or withdrawals.

When people see their money go down, nobody likes that feeling, right?

It's psychological.

Everybody likes to see their money go up.

Nobody likes to see it go down.

So it's this shift that nobody really talks about when we move to retirement is we have to normalize that it's okay for your money to go down.

That's why we saved all that money is so we could spend it.