How much do I need to retire? - OASSIS Benefit Plans › upload › downloadable ›...

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Guided OutcomesTM

Unbiased. Expert. Insights.

How much do I need to retire?

January 23, 2020

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Introductions

Janice Holman, CFA CFP25 years of experience with investments, retirement and education15 years with Eckler, Principal of the firmLead our financial wellness initiatives

Eckler Ltd. Consultants and Actuaries – since 1927Canadian firm, 300+ staff nationallyDon’t sell financial products

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Does thinking about retirement cause you worry?

#1 question asked

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Today

3 Step plan to figuring out how much you need

1. How much will your spending be?

2. Sources of retirement income

3. Making up the difference.

1. How much will your spending be?

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Need to develop a life visionbefore

knowing how much is enough.

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Phases in retirement

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Lots of things to think about

Where will you live?

Will you have paid off debts?

Will you have dependents?

Where will your family be?

How will you spend your time?

Do you have any physical challenges to be mindful of?

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Cash Flow Exercise

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How long does it need to last?

AGE MALES FEMALES

80 77 8485 61 7290 41 5395 20 31

Probability person will be alive at these ages.

65

2. Sources of retirement income

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Government

CPPOASGIS

Workplace

Defined Benefit Pension Plan

Defined Contribution Pension Plan

Personal

RRSPTFSA

SavingsRental income

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Canada Pension Plan (CPP)

You and your employer(s) contribute

Your CPP pension is based on your earnings/contributions – you may however exclude up to 8 years if you’re not earning an income plus additional years at home raising children to a limit

Must apply - between ages 60 - 70

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Canada Pension Plan (CPP)

§ Earliest start age: 60 – with a reduction § 0.6% per month = 7.2% per year

§ Latest start age: 70 – with an increase § 0.7% per month = 8.4% per year

§ If you start your pension before age 65 and are working, you are required to contribute to CPP – the extra contributions will serve to increase your pension

§ From age 65-70 if still working you can choose to contribute to CPP

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CPP

Maximum Monthly Yearly

2020 $1,175 $14,110

Average Monthly Yearly

October 2019 $672 $8,075

https://www.canada.ca/en/employment-social-development/services/my-account/request-pac.html

How do I know how much I’ll receive?1. Obtain a Personal Access Code (PAC) from Service Canada

2. Log on to Service Canada http://www.servicecanada.gc.ca

• Indexed with inflation each year, so it will keep up with cost of living

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$XXX.XX

$XXX.XX

$XXX.XX

$XXX.XX

$XXX.XX

$XXX.XX

$XXX.XX$XXX.XX

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Accumulated CPP Payments

Delay to age 65 – will have received more $ by age 73, than if started at 60Delay to age 70 – will have received more $ by age 81, than if started at 65,

will have received more $ by age 77, than if started at 60

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Old Age Security (OAS)§ Eligibility is based on Canadian residency

§ Full pension after 40 years residence, partial pension after 10 years residence

§ Earliest start age: 65

§ Latest start age: 70§ increase of 0.6% per month = 7.2% per year

§ Max payment Q1 2020

§ $613 monthly

§ $7,362 annually

§ Indexed with inflation

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Receiving OAS

You’ll get a letter right after your 64th birthdayAutomatically get it

if you want to delay receiving you need to complete a form

Need to apply if so, apply right away

Don’t get a letter - apply

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Guaranteed income supplement (GIS)

Available to those collecting OASLow income, living in Canada

Amount depends on marital status and income

Go to www.canada.ca to see possible amounts

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GIS

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Workplace pension plans

Defined Benefit:Amount based on a formula:

1% x Years of Service

Guaranteed to be paid for life

Defined Contribution:Contributions made into investment accountYou decide what to do with your savings pot at retirementDrawdown over time, or buy guaranteed income for life, or combination

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RRSP

18%

$27,230Maximum(2020)

RRSP

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Tax Free Savings Account

TFSA$6,000Annual

Maximum(2020)

$69,500Accumulated

limit(2019)

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#2 – Bringing it all together

Government

CPPOASGIS

Workplace

Defined Benefit Pension Plan

Defined Contribution Pension Plan

Personal

RRSPTFSA

SavingsRental income

$650+ $613$1,263

$? $?

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Taxed in retirement?

Income Taxed?CPPOASGISDefined Benefit Pension PlanDefined Contribution Pension PlanRRSPTFSAOther

3. Making up the difference

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Income matching in retirement

Expenses Income

ShelterFood

TransportationFinancial

Obligations

TravelEntertainment

Gifts/Kids

Pension PlanCPP / OAS

Life Annuity

RRSP / RRIFTFSA / Savings

PT WorkRental Income

Essentials(fixed)

Non-Essential(variable)

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Is there a gap?

Spending

Essentials

$2,000

Extras$700

Guaranteed

$1,263

Flexible$400

$2,700

Income

$1,663

Gap

$1,037

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How to close the Gap?

Part time work

Extra savings

Extras

Essentials

2 ways

Earnings Spending

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How much does it cost?

Today:

$10,000 savings = $50/month

In our example, the gap was $1,000 / month

Ø$200,000 is needed

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Money saving tips

Daily pocket money

Set a budget or track your spending

Essentials

Non-essentials

Cable

Daily coffee / lunch

GroceriesMeal planCoupons (Flip)Grocery store

Home made meals

Know what you spend and whereWHAT WHERE

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3 Step plan to figuring out how much you need

1. How much will your spending be?

2. Sources of retirement income3. Making up the difference.

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We’d like your feedback, please

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We value your feedback. If there is anything else you would like to tell us,

please send comments with the name and date of your webinar to:

go@eckler.ca