18 — Friday, March 6, 1992 - North Shore News Annuity payments provi IF YOU or a loved one is now 70 or 71} and have money in a_ Registered Retirement Savings Plan (RRSP), you will soon face an important decision. That plan must be closed by the end of the year in which the holder turns 71. The RRSP can be cashed in — and be fully taxed —~ or the tax- shelter can be extended by conver- ting to an annuity or Registered Retirement Income Fund (RRIF). This column will discuss an- nuities What is an annuity? An annuity is a contract under which you give a lump sum to a financial institution and they tepay it with interest over a set time. Life annuities, which guarantee payments for as fong as you live, are sold by life insurance com- panies. Term annuities, running a cer- tain number of years, are sold by life insurers and other institutions. Annuities are designed to pro- vide continuing, guaranteed retirement income. Some people divide RRSP money between an annuity for secure income and one or more RRIFs for flexibility. How do annuities work? An annuity is a hands-off in- vesiment. All financial decisions are made by the issuer, who guar- antees you a stream of payments. Your income is paid monthly or annually. Each payment is a blend of principal and interest. if the annuity is purchased with RRSP funds, the full payment is taxable. Otherwise, tax is due only on the interest. Most people buy an annuity with a minimum guaranteed payout period, which typically runs to age 90, or for a set period such as five, 10 or 15 years. The jonger the guaramtee, the lower your income payment. A life annuity without a mini- mum guaranteed payout period does provide higher income pay- ments. However, the life annuity payments end when you die. With a term certain, or guaran- teed payout period annuity, if you Six dancers demonstrate art of eurythmy in WV IT CAME into being by a ques- tion posed by the mother of a tal- ented dance student: Was it possible to find new sources from which an art of movement could be developed? In 1912 this question was put to Austrian artist, philosopher, and Scientist, Rudolf Steiner. His ex- plorations took a different direc-. tion — toward-a new art that he described as ‘‘visible speech and visible song.”’ The art of eurythmy will be presented by the Eurythmy Spring MONTESSORI ACADEMY PRESCHOOLS | OPEN HOUSE Valley at West Vancouver Sec- ondary School on Saturday. The group is an American company touring Canada, the U.S. and Europe. Six dancers in vibrant costumes will combine the music of Schubert, Brahms and Barber with poetry by modern American writers T.S, Eliot and Frost. Organized by the Vancouver Waldorf School, the performance begins at 8 p.m. For tickets, phone 985-7435 Saturday, March 7 French! social courtesies! Registration for September 1992 Le Petit: 960-7973 495 East Windsor Road Upper Lonsdale Mes Petits: 980-1102 -440 Hendry Avenue Lower Lonsdale die during the term of the guaran- tee period, the remaining pay- ments are made to your beneficiary or estate until the end of the guarantee period. Another option is the ‘‘joint and fast survivor’’ annuity. That makes payments until both you and your spouse die, although the level might be reduced for the surviving spouse. When does income begin? An “immediate annuity’’ starts income one month or one year after purchase, depending on whether it’s monthly-pay or an- nual. To buy one you use a lump sum, often a rollover from your RRSP. A ‘“‘deferred annuity’’ starts in- come at a future date, typically at retirement. You may purchase it through installments or with a lump sum. Deferred annuities usually have cash values and provide a death benefit if you die before payments begin. For those who want to lock in long-term interest rates, life in- surance companies offer deferred annuities that can be registered as Dynamic Dots K | by Karl Lagerfeld Created for a fashion aware, self assured woman, who wants only the finest quality designer clothes. Call for your Spring wardrobe appointment or just come in and browse. Exclusively Available at HEATHERINGTONS 926-0090 Park Royal South de steady Income RRSPs. During the RRSP phase they work like guaranteed term deposits. In later years you get one or more opportunities to convert the plan to an RRIF. Otherwise you will receive annuity income start- ing at the age you set up front or some other age if your contract allows adjustments. If you have questions about annuities or would like more in- formation, contact the Life Un- derwriters Association of Canada, 41 Lesmill Rd., Don Mills, On- tario M3B 2T3, or your local life underwriters association. BUDGET INFORMATION 1-800-267-662 If you have questions about the Federal Budget or want printed information, call toll-free. Deaf or hearing impaired call: 1-800-267-6650 «n7rry) i ¥ii Department of Finance Ministére des Finances Canada Canada