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BMO Introduces BMO Lifetime Cash Flow Product

21 January 2011

BMO Bank of Montreal has recently announced the launch of BMO Lifetime Cash Flow, an industry first product that allows Canadians aged 55 and over with a guaranteed cash flow for life.

This new product is a great addition to the suite of deposit products that comprise the BMO LifeStage Retirement Income Portfolios.

Retirement can last quite a while, especially when you consider the length Canadians live nowadays. What can happen is that people start to worry about the possibility of outliving their retirement savings. The BMO Lifetime Cash Flow product helps address the concern made by Canadians, as it introduces a guaranteed lifetime cash flow component that provides continuous payments for the rest of the product holder’s life.

How does the BMO Lifetime Cash Flow Work?

As I mentioned above, the BMO Lifetime Cash Flow is a product that allows retirees to have a guaranteed cash flow for the remainder of their life. BMO Lifetime Cash Flow is a bank deposit backed by the strength and stability of BMO and it is fully protected against the market volatility.

You can put as little as $5,000, and you can start building a personal pension for yourself. The initial deposit provides exposure to a portfolio of BMO Mutual Funds and is rebalanced annually to a progressively more conservative mix of funds over time. After 10 years, the product holder receives guaranteed cash payments equal to 6% per year, which are payable monthly based on the initial deposit. The return of the capital continues for the next 15 years. The deposit holder continues to receive 6% interest income paid by BMO on an annual basis. The best part of this product is that regardless of market conditions, this payment plan continues for the rest of the individuals life or as long as they hold the product.

A recent BMO survey conducted by Harris Decima found that 90% of Canadians believe that it is important to have a guaranteed source of income during retirement. Half of the respondents expressed their concern over having enough money to get hem through retirement. BMO has recommended that every Canadians have at least one source of retirement income guaranteed, and should ideally make up at least 30% of their overall cash flow.

Why would I need this product?

With this product plan it will make your retirement a lot better seeing as you will not have to worry about where you will be getting money to live. Keep in mind though that although having this product will definitely be an asset for your future, it may not be enough depending on the lifestyle you may want to live in your retirement. You should continue to make a saving account that is aimed solely to your retirement.

Ultimately, you will have less to worry about when it comes to your finances; you will be guaranteed to have a cash flow for the remainder of your life. What more can you ask for when you retire?

Having an income plan in place is essential to ensure a comfortable retirement.

Personally I find this to be a great product, and in a few years I am likely to start using the product. As it is now, I do not feel it is completely necessary for me, however you can never start too early preparing for your retirement.

image source: Jayson Ignacio

About the Author


My favorite weapon of choice is the samurai sword. I use it to cut my chicken during dinner, cut my hair and periodically carve my name into stone when I am bored. I love meditating on top of a 15ft high pole and eating those sushi’s with smoked salmon on top. I love everything there is about Canada and everything financially related to Canadians. I write deily posts from Canadian Banks to Credit Card information.

Comments (2 )

mark Wrote:

These products are horrendous scams. I have attached link to the information page for the product. 2.75% fees annually?! That is a flat out raping. You can get perfectly good simple Canadian ETF’s that invest in the same underlying investments that cost 0.15% to 0.25% per year. Go and do the math and compound that difference over say 20 years.
Paying 2.75% on bonds today will eat up MOST of the return… that is incredible. Even if bond yields get back to a more historical level of 6%, you are still paying nearly half that return in fees… wow.
The equity funds are just plain vanilla as well, you need to pay these fees.
Some other problems with these products: 1. Absolutely no liquidity, you are completely locked in. 2. These products are bank liabilities; they are not CDIC insured that means you take the credit risk of the bank as well. Lehman Brothers was a big seller of these products and you remember what happened to them. 3. Product is not joint which means when first spouse dies it gets wrapped up and the details of what the product will be worth at that point is very difficult to understand from the offering documents.
Buyers would be much better off to use an advisor and put together a good portfolio of ETF’s, heck BMO sells a pretty broad line of them if you must be at BMO.

Ralph Wrote:

I currently work at a senior investment position with BMO Private Client Division group, what “Mark” said from above is right, please read the legal policy before buying from your Financial Planner at retail banking branch. The product development team was trying to retain business from Manulife Income Plus plan. However, whoever buy in the product will lock up money first 10 yrs without liquidity, and then next 15 years you start to get 6% back annually, which means you will get 90% of your “PRINCIPAL” in 25 years. Plus 2%+ MER, good product aei? Depends on your age, if your RRSP will turn into RIF within the 1st 10 years of purchase, and by law you are forced to withdraw minimum amount from RIF, then you cannot withdraw the money at all, the bank still did not address this issue back directly.

You can sue your Financial Planner for selling this misleading plan as you will have NO WAY to liquidate your money back. If you would like to NOT deal with that advisor anymore, you can contact me through this email “”, I will see what I can do about it.

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