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Retirement Planning Analysis




    Checklist of requirements for completing your SmartPlan


    1. The approximate number of years you have spent in the workforce since age 18 and your approximate average annual income over the past 5 years.

      • This is used to estimate CPP benefits.

    2. Your approximate current household budget (i.e. the amount you spend each month) not including income taxes.

      • This is used to estimate whether you have a surplus or shortfall when determining the amount you can save each year.
      • The software estimates a sustainable budget based on your current income.

    3. Your most recent December 31st pension plan statements.

      • The value and the amount of your annual contributions will be required and the information is available on those statements.
      • Defined benefit plans can be tricky. You may need to estimate your benefits at retirement if you are still working and contributing to a plan. The statement may only indicate your benefits at retirement if you stopped contributing today.
    4. Your most recent December 31st investment account statements for all TFSA, RRSP, LIRA, taxable investment accounts, savings accounts, etc.
    5. The estimated amount you intend to contribute to each of your personal investment accounts.

    6. Your latest Notice of Assessment from Canada Revenue Agency. You receive this each year after filing your tax return, typically in May or June.

      • Your ‘Unused RRSP Contribution Room’ and your ‘Pension Adjustment’ figures are available on this statements
    7. Your estimated years in retirement from the date of retirement to your life expectancy. The software provides guidelines.
    8. Your estimated after-tax income needs in retirement. The software provides guidelines.
    9. Your CPP and OAS benefits in retirement. The software approximates your benefits and the age at which you are first eligible.

    User Tips

    • Tip 1: ....
    • Tip 2: ....
    • Tip 3: ....

    Overview

    The SmartPlanner is a simple and accurate tool designed to provide you with a comprehensive analysis of your financial picture in retirement.

    Web Based

    The SmartPlanner is a fully web-based program that can be run on any computer or device with access to the internet. High end security is used for all client information and sensitive client data.

    It is currently free to all users.

    Simple Data Entry

    The SmartPlanner has found the happy medium and eliminates the need for excessive detail during the input process. It allows you to enter key information simply and efficiently. Refer to the checklist link on the first page of the SmartPlanner if you are unsure of what information you will need.

    Help is conveniently available during the input proess by clicking on the help icon for each item.  Some of the data is filled in with suggestions that can help speed up the process but you are free to override those suggestions. The FAQ page provides further explanation on the rationale and methodology for the inputs. 

    The time you spend entering data can be reduced from hours to minutes.

    Functionality

    The SmartPlanner provides much more detail than most retirement calculators.

    As with other calculators, it forecasts retirement savings needs and adjusts for inflation. But it also includes any pension plans you have and government benefits that you are eligible for. It also allows you to plan a retirement with phased income, part-time business income, and real estate income.

    Whatever your circumstances and plans may be there are a number of factors to consider. The Smart Planner calculates how each of these factors impacts your retirement plan.

    You can change your retirement income needs as you go from an active retirement lifestyle to a more passive retirement lifestyle as you advance in years. You can add separate one-time benefits and individual lump sum expenditures into your plan.

    You can also change any factor on your input page to see the effect on your retirement plan.

    Tax Calculations

    Smart Plans estimates the taxes payable each year based on current T1 tax calculations. While the SmartPlanner is not a tax program, the tax estimates provided are important factors that are necessary to create an accurate retirement plan.

    Corporate taxes are not built into the SmartPlanner. Users who require corporate tax information to be included into their retirement plans should employ the services of a more comprehensive planning solution.

    Risk Analysis

    Returns on investments will vary widely from year to year and the impact that these varying returns has on your financial future must be considered.

    The SmartPlanner uses a simplified Monte Carlo simulation that calculates the effect of varying returns. This feature helps to determine the probability of whether or not your retirement plan will meet your future needs.

    You can read more on how we use Monte Carlo simulations.

    Reports

    The SmartPlanner is designed for use with all clients regardless of age, net worth, or marital status. The reports can be read online with the free version or saved in PDF format to be printed at any time with the subscription version.

    The reports have been designed to be concise with a focus on keeping the information relevant and easy to understand.

    Analysis

    Whenever shortfalls in retirement financing are projected to occur, the SmartPlanner offers options the user may implement to meet their goals.

    When choosing an option or combination of options to overcome a shortfall, users should always run the program again to verify whether the desired result will be achieved.

    A word of caution

    When using the calculator you may see some default numbers appear with respect to rate of return, inflation, life expectancy and so on.  These are relatively conservative estimates based on historical data. While you are free to input your own numbers, we encourage you to set the rose coloured glasses aside. Using assumptions that are too optimistic can lead to disappointment and future hardship if your plan does not achieve these assumptions.

    Support

    We want to ensure that your experience with the SmartPlanner is a good one. If you are having problems with the program, want clarification on a simple matter or want to provide feedback please contact us by email at mail@moneypages.ca

    We will try to respond as promptly as possible.

    Security

    Your information can be saved on password protected personal file.  If any changes occur in your personal or financial situation, it is a simple process to recall your file and edit the relevant information.

    Understanding Monte Carlo

    Monte Carlo simulations perform a risk analysis on your portfolio.

    Many simple retirement planning calculators can provide you with a picture of your financial future. Their results are based on factors such as the value of your investments, your life expectancy and the rate of return on your investments.

    • Often their calculations assume that you will earn exactly the same rate of return on your investments every year. But that never happens.
    • A more accurate picture can be painted if the variability of the returns on your investments is considered.
    • A Monte Carlo simulation samples many different random rates of return over a number of years. It then creates a level of probability on what your plan will achieve.

    As an example a simple calculator may show that you have exactly enough money to retire and cover your living expenses until age 90. In that same situation, a Monte Carlo simulation may show that you have a 50% chance of not having enough money to fund your retirement and a 50% chance of having excess money at age 90.

    • Some financial plans suggest a 70% threshold as a benchmark for a successful solution. Others suggest a 66% threshold provides a reasonable margin of safety.
    • According to an article appearing in www.dailyworth.com, “the objective is not to achieve 100-percent probability of success, as you may have to sacrifice your current lifestyle goals unnecessarily… Monte Carlo analysis helps us prioritize how we can best spend, save and share our hard-earned capital.”
    • Read the Daily Worth article here.

    While our Monte Carlo simulation measures the probability of success it does not measure any potential shortfall or surplus.

    • When one of the random possibilities generated misses your target by even $1 it is considered a failure. Your simulation could have several possibilities that miss by only a small amount.
    • For that reason you should use the Monte Carlo simulation along with our Stress Test to determine the whether your retirement is financially viable.

    Each financial planning program that uses Monte Carlo simulations has their own approach.

    • Some require you to input each of your individual investments into the program. If some investments have a short history, the accuracy of the data may be suspect.
    • Some use a limited number of iterations. These are repeated calculation of projections using random rates of return to create probabilities. Those that use less than 100 iterations have a greater margin for error.

    There are a number ways in which to apply a Monte Carlo situation to your financial situation.

    MoneyPages has concentrated on what we believe is the key issue, the volatility or variability of return on your investments.

    • We use a Monte Carlo simulation based on the estimated variability of returns required to achieve the rate of return you have chose for your plan.
    • Each portfolio undergoes 1,000 iterations of performance to determine your probability of success.

    These results are integrated with your other sources of income such as the Canada Pension Plan, Old Age Security and employer pension plans. Together these factors  provide you with a comprehensive picture of your retirement.

    Every user has to be comfortable with their own choices. By trying a few different scenarios, you can compare various results, each with its probability of success along with an average shortfall or surplus. This can help you understand your options and to see the impact of any choices you make if you modify your plan.

    If you require a more detailed risk analysis you can refer to financial plans such as FP Solutions and Naviplan. These can be prepared for you by Certified Financial Planners.

    Disclaimer: The Monte Carlo simulations and probabilities of success created by MoneyPages are for illustrative purposes only and results produced by a Monte Carlo simulation may vary with use and over time.

    MoneyPages makes no claim as to the accuracy of these projections. The projections produced are hypothetical in nature and do not reflect actual investment results nor do they guarantee future results.

    Any investment decision based on the results of these projections should be discussed with the appropriate financial professionals before implementing any change to your investment strategy.Investing involves risk including the potential loss of principal. No investment strategy, including diversification, asset allocation and rebalancing, can guarantee a profit or protect against loss.


    Retirement Planning Analysis for



    First Name Surname Birthdate (dd.mm.yyyy)
    Client information
    Spousal information
    i
    The Province of Residence is required to estimate the income tax rate. If the retirement residence is expected to be in a different province than the current residence, the intended province of retirement should be entered.
    Pre-Retirement Income and Expenses
    Income
    $
    $
    $
    $
    $
    $
    %
    %
    $
    $
    Employer Sponsored Savings Plans
    %
    %
    $
    $
    %
    %
    %
    %
    $
    $
    $
    $
    %
    %

    Personal Savings and Investments

    $
    $
    $
    $
    $
    $
    $
    $
    $
    $
    $
    $
    %
    %
    $
    $
    $
    $
    %
    %
    $
    $
    $
    $
    %

    Liquidation and acquisition of assets, inheritances and other large expenditures or receipts of cash
    i
    Use this table to indicate any major transaction that causes a significant, non-recurring increase or decrease in financial assets and to whom (for couples) any tax liability will accrue. For shared assets, the option of splitting the capital gain between spouses is available. This table can be used, for example, to reflect the sale of a business or real estate, purchase of an annuity, debt retirement or the receipt of an inheritance.

    Transaction
    Description    		 Time
    frame
    (Yrs)    		 Type Amount Taxable Capital
    Gain    		 Tax Attribution
    $
    $
    $
    $
    $
    $
    $
    $
    $
    $
    $
    $
    %
    $
    $
    $

    Retirement Income

    $
    $
    $
    $

    Your part time income in retirement seems high. If this value is correct:

    If this value is incorrect:

    Government Pensions
    $
    $
    $
    $
    Defined Benefit Pension Plan (RPP)
    i
    The program administrator of the Defined Benefit Pension Plan will have to be consulted in order to determine Pension Amounts, Bridge Benefits, Survivor Benefits, and Indexing rates . That information may also be available on the annual or semi-annual pension statement.
    Have regular RPP benefits commenced?
    i
    Answer "No" to this question if bridge benefits are currently being received and which will end when regular benefits commence.
    $
    $
    %
    %
    $
    $
    %
    %
    %
    %
    Tax Deferred Savings Income
    $
    $
    %
    %
    $
    $
    %
    %

    Post Retirement Investor Profile

    %
    %
    %

    Self Income

    Self Income Spousal Income Payroll Tax Items Income Tax Items Federal British Columbia Alberta Saskatchewan Manitoba Ontario Quebec New Brunswick Nova Scotia Prince Edward Island Newfoundland and Labrador Other
    Asset Liquidations and Purchases (Tax Deferred Annual Contributions) Yrs to Ret Capital at Jan 1 of retirement year PV of shortfall Pre Retirement rate of return Investment Profile Std Dev CPP exemption Personal Exemption Federal British Columbia Alberta Saskatchewan Manitoba Ontario Quebec New Brunswick Nova Scotia Prince Edward Island Newfoundland and Labrador
    Participants OAS Clawback Calculations Amount Capital Gain DPSP Expected Annual Returns Initial Deposit RRSP Rebate Investment Profile Interest Dividends Cap Gains CoL Yrs in Ret Tax Deferred Estate Value of Cap Shortfall at retirement Post Retirement rate of return CPP Max Contribution Age Threshold Health Premium Health Services Fund Prescription Drug Plan BC AB SK MB ON PQ NB NS PE NL
    Full Time Part Time Bridge RPP RPP Survivor? CPP CPP Survivor OAS Annuity 1 Annuity 2 Rate Full Time Part Time Bridge RPP RPP Survivor CPP CPP Survivor OAS Annuity 1 Annuity 2 Years Liquidation Acquisition Self Spouse Defined Benefit Pension Plan Self Spouse RRSP Contributions Tax Free Savings Account Self Risk Averse SS Reduction Final Disposition Non Taxable Estate (TFSA) Contribution increase required Annual Cost of Living Increase (i) CPP Contribution rate Age Exemption Amount Single Spouse Tax Reduction Credit
    Start Yr Start Yr Start Yr Start Yr Start Yr Start Yr Start Yr Start Yr Start Yr Start Yr Threshold Start Yr Start Yr Start Yr Start Yr Start Yr Start Yr Start Yr Start Yr Start Yr Start Yr YTR Pct of Salary Pct of Salary Current Excess/Unused Contribution Room Self Annuity Calculations Spouse Annuity Calculations Initial Annual Increase Spouse Conservative Start Yr Start Yr Start Yr Start Yr Date Taxable Estate (Probate) Budget Decrease Required Average pre retirement tax rate Implied Max Salary Age Threshold Amount Reduction Base Amount
    100% Clawback YIR Ann Increase Annual Maximums Contributions cease Start Start After Moderate Years Estate Debt future dollars Average post retirement tax rate EI Max Contribution Age clawback rate Rate
    OAS Maximum Calculations Defined Contribution Pension Plan Cease Date Pct of Salary Non Maximized Contribution End End Cease Aggressive Final Expenses Estate Total current dollars EI Contribution Rate Full age clawback
    Today CPP Max CPP Max Self Total Spouse Total Cease Yr Ann Maximum Annual Increase Initial Partial Annuity Initial Partial Annuity Speculative Self Spouse Total annual contributions at retirement ? Year End Assets Based on Random Rates of Return Implied Max Salary Pension exemption Surtax Surtax Surtax Surtax Surtax Surtax Surtax Surtax Surtax Surtax Surtax Surtax Maximum
    CPI StopYr StopYr StopYr StopYr StopYr StopYr StopYr StopYr StopYr StopYr StopYr StopYr StopYr StopYr StopYr StopYr StopYr StopYr StopYr StopYr Final Partial Ann Increase Yrs to Increase Final Partial Annuity Final Partial Annuity Years to Increase and Amount TFSA Retirement Date StopYr StopYr StopYr StopYr Expenses at retirementt Accumulation Depletion Tax Credit rate
    CPI +1 OAS Clawback Calculations Contributions and balances are reflected in Column CU and CQ Amount of Increase r-i CPI r-i CPI Contributions Annual Max Non Registered (Taxable) Savings Returns from Taxable Account Income & RRSP Annuity & Tax Rebate - contributions Taxes Payable Delay retirement by Self Tax Calculations (Current Dollars) Dividend tax credit Combined Income Less Spousal Tax Calculations (Current Dollars) Combined Income less Reduction
    Total Taxable Earnings Percentage of Investment Income Current Dollars Future $ Self Spouse Current PA Annual Contribution Current PA Annual Contribution (1+i)/(1+r) (1+i)/(1+r) Tax Deferred Annual Rate of Return Self Spouse Withdrawal Debt Servicing Withdrawal Non Taxable Budget Withdrawal Deposit Asset Purchase Withdrawal Taxable Pre Retirement Self Spouse Combined Payroll Taxes Combined Total Taxes Combined Tax Rate Rolled Over RRSP Taxes Budget Capital Shortfall Total SD & Employment Contributions Contributions+ Rebate dep Annual Increase in Assets Employment Income Current $ Payroll Tax Calculations Current $ Pension Splitting Calculations Taxable Income Total Taxable Income Taxable income in Retirement Employment Income Current $ Payroll Tax Calculations Current $ Pension Splitting Calculations Taxable Income Total Taxable Income Taxable income in Retirement
    Year Taxable Taxable TAXABLE TAXABLE CPP TOTAL Net OAS RRSP Rebate Gross Income OAS Clawback Capital Capital Gain Own Total Own Total Self Spouse PA Increase Room PA Increase Room Withdrawal Balance Withdrawal Balance Balance Room Contribution Room Contribution Budget For Assets Balance Transfer to TFSA Rebate Deposit Increase (Taxable) Balance Retirement Final Expenses Total Surplus Asset Acquistion Budget Expenses Balance Total End Year Assets Budget Shortfall Total Expense, Taxes & Savings Charted Income Estimated Combined Income Tax Rate Pension Income Splitting Reduction Net Pension Dividend Gross Up Taxable Cap Gain RRSP Contribution RRSP Rebate RRSP Rebate RRSP Rebate RRSP Rebate RRSP Rebate Health Premium RRSP Rebate Health Premium Drug Premium RRSP Rebate RRSP Rebate RRSP Rebate RRSP Rebate RRSP Rebate RRSP Rebate Pension Income Splitting Reduction Net Pension Dividend Gross Up Taxable Cap Gain RRSP Contribution RRSP Rebate RRSP Rebate RRSP Rebate RRSP Rebate RRSP Rebate Health Premium RRSP Rebate Health Premium Drug Premium RRSP Rebate RRSP Rebate RRSP Rebate RRSP Rebate RRSP Rebate RRSP Rebate Self Spouse Self Spouse Self Spouse Self Spouse Self Spouse Self Spouse Self Spouse Self Spouse Self Spouse Self Spouse
    1.1.2001 12.1.1931 Interest Dividend Cap Gain Potential Actual Contributions Withdrawals Self Spouse Balance Contribution Limit Pension Adjustment Contribution Limit Pension Adjustment Annuity Budget For Assets Annuity Budget For Assets Self Spouse Interest Dividend Cap Gain Total Returns Expenses Federal Provincial Federal Provincial Shortfall Capital Withdrawn Savings Contributions Taxes RRSP Tax Rebate Capital Withdrawn Employment Income Canada/Quebec Pension Plan Old Age Security Registered Pension Plan Other Annuities PV of Shortfall Pre Retirement Post Retirement Std Dev Random Rate Tax Surtax Tax Surtax Tax Surtax Tax Surtax Tax Surtax Tax Surtax Tax Surtax Tax Surtax Tax Surtax Tax Surtax Tax Surtax Tax Surtax Tax Surtax Tax Surtax Tax Surtax Tax Surtax Tax Surtax Tax Surtax Tax Surtax Tax Surtax Tax Surtax Tax Surtax Tax Surtax Tax Surtax
    A B C D E F G H I J K L M N O P Q R S T U V W X Y Z AA AB AC AD AE AF AG AH AI AJ AK AL AM AN AO AP AQ AR AS AT AU AV AW AX AY AZ BA BB BC BD BE BF BG BH BI BJ BK BL BM BN BO BP BQ BR BS BT BU BV BW BX BY BZ CA CB CC CD CE CF CG CH CI CJ CK CL CM CN CO CP CQ CR CS CT CU CV CW CX CY CZ DA DB DC DD DE DF DG DH DI DJ DK DL DM DN DO DP DQ DR DS DT DU DV DW DX DY DZ EA EB EC ED EE EF EG EH EI EJ EK EL EM EN EO EP EQ ER ES ET EU EV EW EX EY EZ FA FB FC FD FE FF FG FH FI FJ FK FL FM FN FO FP FQ FR FS FT FU FV FW FX FY FZ GA GB GC GD GE GF GG GH GI GJ GK GL GM GN GO GP GQ GR GS GT GU GV GW GX GY GZ HA HB HC HD HE HF HG HH HI HJ HK HL HM HN HO HP HQ HR HS HT HU HV HW HX HY HZ IA IB IC ID IE IF IG IH II IJ IK IL IM IN IO IP IQ IR IS IT IU IV IW IX IY IZ JA JB JC JD JE JF JG JH JI JJ JK JL JM JN JO JP JQ JR JS JT JU JV JW JX JY JZ KA KB KC KD KE KF KG KH KI KJ KK KL KM KN KO KP KQ KR KS KT

    Input Summary

    Current Situation Plans for Retirement
    Age Province of Residence
    Employment Status Initial retirement budget (Current Dollars)
    Years in workforce since age 18 Updated retirement budget (Current Dollars)
    Contributing to a Defined Benefit Pension Plan
    Contributing to a Defined Contribution Pension Plan
    Contributing to a Defered Profit Sharing Plan Years until retirement
    Most recent Pension Adjustment Years in retirement
    Value of Non Taxable Accounts on December 31 of past year Age when tax deferred savings withdrawals begin
    Value of Tax Deferred Accounts on December 31 of past year Estimated final expenses
    Value of Taxable Accounts on December 31 of past year Desired Estate Value
    Pre Retirement Investor Profile Post Retirement Investor Profile
    Expected pre-retirement rate of return on investments Expected post-retirement rate of return on investments
    Based on historical data, this rate of return is excessive for this investor profile Based on historical data, this rate of return is excessive for this investor profile
    Expected annual increase in the Consumer Price Index
    Expected annual increase in cost of living

    This document is designed to be a guideline for developing your personal investment plan and is not designed to predict the future. The results appearing in this plan are based on user estimates and other assumptions. All rates of return and rates of inflation incorporated into this plan are assumptions. If the rate of return that you actually achieve on your investments is less than the assumption, it will impact the results in a negative manner and may result in a significant funding shortfall that could prevent you from achieving your financial goals. If the average rate of inflation during your lifetime is greater than the assumptions it will impact the results in a negative manner and may result in a significant funding shortfall that could prevent you from achieving your financial goals. Nothing in this plan should be interpreted as a guaranteed. No responsibility is assumed for any losses, whether direct, indirect, special or consequential that arise out of the use of this document. The information contained herein is from sources believed to be reliable but accuracy cannot be guaranteed. All information in this plan is subject to change without notice.

    Income & Expenses

    The chart below represents the relationship between income, expenses, taxes and savings. Incoming and outgoing cash are represented by the stacked columns and the horizontal lines, respectively.

    Pre-Retirement Analysis

    Prior to retirement, income, expenses and estimated taxes are illustrated to provide a visual representation of whether or not the assumed savings contributions are indeed realistic. Budgets can change significantly over time depending on family circumstances - the further away from retirement, the more opportunity for change. For that reason, all savings contribution assumptions that have been input are included in the final calculation, regardless of their feasibility. However, if there are large or persistent gaps between income and total expenses plus savings contributions in the pre-retirement years, this provides you with a reality check on your assumptions. Estimate shortfalls or surpluses are indicated in the cash flow table.

    Post Retirement Analysis

    During retirment, any shortfall between retirement income and total expenses plus taxes is automatically deducted from personal savings. As long as personal savings are sufficient, the household expenses will be met. Once personal savings are depleted, a gap will appear between the stacked column and the total of expenses plus taxes, indicating that the retirement plan needs to be adjusted. Estimated shortfalls or surpluses are indicated on the cash flow table.

  • Employment Income
  • RRSP Tax Rebate
  • Registered Pension Plan
  • Canada/Quebec Pension Plan
  • Old Age Security
  • Other Annuities
  • Capital Withdrawn
  • Savings Contributions
  • Expenses
  • Taxes
  • Total Expense, Taxes & Savings

    • Methodology and Assumptions for Annual Budget Projections

    Income

    Each item is a combined total of both spouses. Incomes are gross incomes. Refer below to taxes for an explanation as how they are calculated.
    Employment income includes both full time and miscellaneous or part time employment during retirement.
    Registered Pension Plans are defined benefit plans and includes the annual total of all bridge benefits, regular benefits and survivor benefits, if applicable. Benefits are adjusted according to assumed CPI when so directed.
    Canada Pension Plan (CPP) includes regular benefits and survivor benefits, if applicable. These benefits are adjusted for early or delayed withdrawal and assumed changes in CPI.
    Old Age Security (OAS) pensions are adjusted for delayed withdrawals and assumed changes in CPI. Pensions are clawed back for high incomes, in accordance with legistlation.
    Other pensions and annuities are adjusted for assumed CPI changes when so directed.
    Tax rebates for RRSP contributions are included in the following year cash flow. If the choice to re-invest this rebate, it will be reflected in an increased savings contributions.

    *Cash flow from the purchase or sale of assets, inheritances, etc. will not be illustrated in this chart. The increase or decrease in capital from any such transaction will be incorporated in the chart on the following page.

    Expenses and Savings

    The total is the sum of all household expenses, savings contributions and taxes.
    Expenses are automatically adjusted for the estimated annual cost of living increase.
    Savings Contributions are combined totals of both spouses and include both self directed savings and contributions to any employer sponsored pension plan, and RRSP tax rebates when so directed.

    Taxes

    It is assumed that there are no income tax liabilities or non realized capital gains when this report was prepared. Annual income tax estimate include a liability for all capital gains incurred in that year, even if they will be deferred to future years. The estimated income taxes are based on the assumption that tax policies in the various jurisdictions will remain in force throughout and that tax brackets will be adjusted with changes in CPI. The following non refundable tax credits are calculated: Personal and Age Exemptions, Pension Exemption, Federal Employment Tax Credit, Low Income Tax Credits (for applicable provinces), Family Tax Credit (MB), Canadian Dividend Tax Credit. Refundable Tax Credits are not calculated. Medical (ON, PQ) and prescription drug insurance premiums (PQ) are also calculated. Residents of other provinces with health insurance premiums should include them in their household budget estimates. Pension income splitting for couples is automatically calculated after age 65. Payroll tax estimates for all employment income are based on those rates for non self employed earners.

    Net Worth

    Projected total financial assets at Dec 31 of year preceeding
    retirement (previous year if retirement has commenced)    		 Non Taxable Financial Assets of estate
    Projected total financial assets (or debt) of estate ( ) Financial Assets of estate subject to estate taxes
    Financial Assets of estate subject to both deferred income and estate taxes
    Estimated Unused (Excess) RRSP contribution at retirement ( ) ( )

    Methodology and Assumptions

    Savings Accumulation

    Tax deferred savings includes RRSPs, defined contribution pension plans, deferred profit sharing plans, life income funds or locked in retirement accounts. Non taxable accounts are TFSAs.

    Savings Depletion

    Tax deferred savings will be withdrawn on an annuitized basis, commencing on the date as indicated by your preferences, subject to requirements of Canadian legislation.
    Shortfalls in retirement income will be addressed first by withdrawals from your taxable accounts, then by withdrawals from your TFSA and then by further withdrawals from your tax deferred accounts (in addition to the annual annuitized amount). When all savings are depleted, budget shortfalls will be applied to debt.
    This method is intended to address withdrawal minimums for tax deferred accounts according to Canadian legislation and limit income taxes on your estate. In practice, a different sequence of withdrawals may be more appropriate for you.

    Debt

    It is assumed that household debt will be retired through the period in question and accounting for these payments as budgeted items. Any debt that is illustrated on the chart is calculated as a result of not having sufficient savings to cover any annual budget deficit. Additional unretired household debt is not calculated nor illustrated.

    Options to Address Savings Shortfall :

    There are three possible solutions over control can be exercised.Each is presented here as a stand-alone solution but they can be used in combination with one another:

    If you are already retired, only option 1 is applicable.

    The first impulse to solving a shortfall may be to increase the projected rate of return on investments. This solution is discouraged because there is no control over it and it has a lower probability of success than the other solutions.

    Option 1
    The financial assets at retirement are projected to be . This amount would be sufficient if annual budget expenses were reduced by about .

    Option 2
    The estimated savings shortfall at retirement for the desired budget are . If annual savings contributions were increased until retirement by about sufficient capital should be accumulated to fund the desired budget.

    Option 3
    Savings will be depleted prior to the end of retirement. If retirement(s) were delayed by years, there should be sufficient savings to fund your desired budget in retirement. This solution also implies that the time in retirement would reduced by the same amount of time by which retirement is delayed.

    Other Potential Solutions
    If there are other non financial assets, liquidating these assets in order to fund retirement may be a solution. This may require a home downsizing or taking other steps to unlock any built up home equity.

    These suggested solutions are inexact. The plan should be run again experimenting with various compromises until the best solution is found.

    Monte Carlo Simulation

    Your basic results indicate a final estate value of

    According to the investor profile selected, the standard deviation used to calculate the volatility of investments is:

    • in the pre-retirement period, and
    • during retirement

    Based on the investor profile chosen, the Monte Carlo simulation indicates a

    • probability of successfully funding your retirement plan

    According to an article by Deborah Stavis CFP® appearing in September 2014 of www.dailyworth.com “the objective is not to achieve a 100 percent probability of success, as you may have to sacrifice your current lifestyle goals unnecessarily… Monte Carlo analysis helps us prioritize how we can best spend, save and share our hard-earned capital.” At a minimum the probability for having excess funds should be 66%.

    The chart on the right illustrates where this probability lies in the 4 categories of having a successful retirement. The Stress Test on the right illustrates and estimates the potential impact of a market correction on your portfolio.

    The Monte Carlo simulation and the Stress Test should be run each year to determine if the probability of success has changed and if any action should be taken.

    Probability of Success

    Probability of Success at Various Life Expectancies

    Stress Test

    Based on your assumptions for rate of return on investments, a stress test has been applied to your retirement savings projections. In the event of a major market correction the stress test can help you determine how much of a cushion (if any) is built into your plan.

    The projected total financial assets (or debt) of estate after applying the stress test are .

    Annual Cash Flow

    Year Employment Income Canada Pension Plan Old Age Security Registered Pension Plan Deferred Tax (RRIF) Annuities Other Annuities Other Savings Withdrawals RRSP Tax Rebate Bulk Cash Received Bulk Cash Spent Savings Contributions Expenses Taxes Cash Flow Surplus (Deficit)

    Progress Report

    Year Planned
    Contri-
    bution    		 Planned
    Withdra-
    wal    		 Year End Target Year End Value
    Year Planned
    Contri-
    bution    		 Planned
    Withdra-
    wal    		 Year End Target Year End Value
    Year Planned
    Contri-
    bution    		 Planned
    Withdra-
    wal    		 Year End Target Year End Value

    The SmartPlanner allows you to create a PDF report which you can print or save for future reference.

    Please enter the name of the report below:


     

    CAUTION