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Retirement Income
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Published in November 2018 by Don Anderson
By leveraging the cash value that builds up inside your Legato 3 Plan, you and your spouse can create a retirement income stream to make your future a little more affordable. Let's explore how this works. 

Canadians considering how to invest their savings are often confronted by the debate between two tax-protected vehicles: RRSPs and tax-free savings accounts. They both have pros and cons, and each have maximum contribution limits.

A Legato 3 Plan can also be designed as a tax-protected investment vehicle in which people grow their savings. Additionally, each Legato Plan includes insured protection for one person or the couple. 


Let's consider a young couple that we'll call Amir and Stacey. They've decided to create a Legato 3 Plan based on a corporate bond - currently in the "5.5% to 6%" range. The compounding, annual growth of their savings within the tax-free environment of a Legato plan will improve their overall wealth as they head towards retirement. 

Amir and Stacy make premium deposits into their Legato 3 Plan for a self-determined number of years. At Legato, we like to suggest a commitment ranging from six to ten years. Our imaginary couple then creates a future income stream by using that policy as collateral on a loan for an amount up to 90% of the accumulated cash value. The income is not taxable since it comes to the couple as a loan. Since the interest payments can be blended back into their Legato 3 Plan, our happy couple can enjoy the entire cash flow from the loan for their retirement, future travel plans or whatever suits their interests. 

When the Legato 3 Plan pays out at the passing of the life insured, there are sufficient funds to pay back the loan plus the associated interest payments, and also a remaining legacy portion that can pay estate taxes, pass monies to their next generation or make a charitable gift.

This story illustrates an interesting and valuable way in which to leverage and benefit from a Legato 3 Plan. 
Our clients are utilizing this investment, insurance and retirement vehicle to make their future life transition just a little smoother. Maybe you should consider a Legato 3 Plan for your retirement, too?


Don Anderson
Legato

​updated Feb 7, 2019

Copyright 2025 - Legato Wealth Management Inc. 

  • Home
  • About
    • Mission & Principles
    • Our People
    • Strategic Relationships
    • Community
    • Learning & Connecting
    • Contact
    • Meeting Legato >
      • Pre-Application Review
      • Application Process
      • Meeting Checklists
      • Parking
    • Premium Deposits
  • Advice
    • Our Process
    • Protect & Prepare
    • Investing in Life Insurance
    • Pro Plan
    • Philanthropy >
      • My PAR Gift
      • What Is My PAR Gift
      • My PAR Gift - FAQ
    • Policy Search
    • Will Search
  • Articles
    • Be The One
    • Part 1: The Estate Freeze
    • Part 2: Investing For The Estate Freeze
    • Unlocking Intergenerational Succession
    • Freeze, Fund, & Feature
    • Tax Apportionment in Estate Planning
    • Beneficiary Designations and Resulting Trusts Revisited
    • Part 1: Legacy Gifting Private Company Shares
    • Part 2: Legacy Gifting Private Company Shares
    • Reduce Estate Shrinkage
    • Take Time For Your Legacy
    • Take Five
    • Look Across
    • Lest We Forget
    • Retirement Income