What is the primary characteristic of a LIF (Life Income Fund)?

A Life Income Fund (LIF) is primarily designed to provide a steady income during retirement, based on the balance accumulated in the fund at the time of retirement. This mechanism ensures that individuals receive ongoing payments until death, converting the retirement savings into a reliable income stream. Because it is meant to deliver long-term income rather than a one-time cash out, it aligns closely with the needs of retirees seeking financial security.

This structure is designed to balance the goals of providing sufficient income while preserving the capital within the fund over a longer period, avoiding premature depletion of the retiree's resources. Thus, the focus is on lifetime income, which distinguishes it from other investment vehicles that may prioritize liquidity or flexibility in accessing funds.