Final Answer:
Registered annuities offer a guaranteed income stream for life, providing financial security and predictability, unlike RRIFs that are subject to market fluctuations.
Step-by-step explanation:
Registered annuities and RRIFs are both retirement income vehicles, but they differ in crucial aspects. Registered annuities provide a fixed, guaranteed income stream for life, offering financial stability, especially for those concerned about outliving their savings. This certainty is particularly advantageous for retirees seeking a predictable cash flow to cover living expenses.
In contrast, RRIFs (Registered Retirement Income Funds) are more market-dependent. The income generated from RRIFs is influenced by the performance of the underlying investments, which exposes retirees to market volatility. This can result in fluctuating income levels, making it challenging for retirees to plan their finances with confidence.
Furthermore, registered annuities mitigate longevity risk, ensuring a steady income regardless of how long an individual lives. This longevity protection is absent in RRIFs, where the income is subject to market conditions and the retiree's investment choices.
In summary, the advantage of a registered annuity over an RRIF lies in the guaranteed, lifelong income it provides, offering retirees financial security and peace of mind in their retirement years.