Guaranteed income as a ‘license to spend’
Do you often feel like you are living from paycheck to paycheck? Do you find yourself wondering how to cover your daily expenses for the coming month? Guaranteed income can help you with this.Guaranteed income is a form of income that never goes away, no matter what.
What Is Guaranteed Income?
Guaranteed income is a form of permanent monthly cash flow that you can use to cover your daily expenses. It cannot be outlived, carried over into the next month, or diverted for any reason other than purchasing consumer goods and services.Guaranteed income is a sort of cash transfer program that provides individuals or households with continual unconditional cash distributions. This contrasts from traditional social safety net programs in that it provides recipients with a consistent, predictable source of income to spend as they see fit, with no restrictions.The qualifying conditions for guaranteed income programs and their variants, such as basic income, citizen dividends, partial basic income, and universal basic income, are modest or nonexistent. A guaranteed income may or may not be sufficient to cover basic necessities.How Does It Work?
Typically, a company distributes guaranteed income in the form of an annuity. The way it works is simple: when your guaranteed income starts at age 65 or later, you will receive guaranteed monthly cash flow for life or until you pass away. You can use your guaranteed income to cover any expenses that come up throughout the month, including rent payments, utility bills, and groceries. Since this income never expires, it’s often called “License to Spend.”An annuity is purchased with a portion of your existing retirement assets, either as a one-time lump sum or as a series of payments. This is used to generate guaranteed income payments upon retirement. You can pick how and when to get income payments depending on the annuity. Money left in your investment accounts can continue to increase, allowing you to stay up with inflation and provide finances for some of life's more enjoyable activities.Is it appropriate for me?
Annuities are a terrific way to supplement your retirement savings strategy. They can help you grow your money today and provide a source of guaranteed income when you need it later. Speak with a financial advisor to explore if guaranteed income can supplement your retirement income goals.Who Qualifies?
Many factors determine if someone qualifies for guaranteed income, including the current financial situation and overall long-term goals and savings strategies.Some basic rules can help determine if guaranteed income is suitable for you. The main requirements are as follows:- 65 or older
- Single, widowed, or divorced, and an income below $18,984.
- Receiving the Old Age Security (OAS) pension.
- Your income plus the income of your spouse or common-law partner is $25,104 or below, and gets the full pension from OAS.
- Your income plus the income of your spouse or common-law partner is lower than $45,504 and does not receive a pension from OAS.