LLQP Segregated Funds & Annuities · Component 1.3 · 35% of the exam
A client plans to retire at sixty and start government pensions at sixty-five. The need this creates is:
- A bridge of income from personal savings for the five years before the pensions begin
- BAn immediate annuity purchased at sixty-five, when the pensions begin and income is known
- CA longevity hedge, since the gap years are the most likely period for the client to outlive savings
- DA guarantee that the government pensions will not be reduced when they eventually start
Correct answer: A) A bridge of income from personal savings for the five years before the pensions begin
The first years of retirement are funded entirely from personal capital in this pattern, which raises the withdrawal rate sharply and makes sequence of returns risk acute.
Why the other options are wrong
- BThe problem is the five years before sixty-five, not after.
- CLongevity risk arises at the far end of retirement, not in the bridge years.
- DGovernment pension amounts are set by the programs, not by a private guarantee.
Exam tip
Early retirement creates a bridge to fund from capital.
Common mistake
Planning retirement income as though every source started at once.
What this tests
CISRO competency component 1.3 — Assess the client's needs and situation — which is weighted at 35% of the Segregated Funds & Annuities module. Written against the published curriculum.
More from component 1
- The first step before recommending a segregated fund or annuity is to:
- A client's 'time horizon' for an investment is:
- 'Risk tolerance' in an investor profile refers to:
- A client says he wants 'high returns with no risk of losing money'. The agent should:
- Investment objectives are commonly classified as:
- Why is the client's marginal tax rate relevant to a segregated fund recommendation?
Practice the whole Segregated Funds & Annuities module
Timed sets weighted like the exam, and review of every question you miss. Free to start.