Week 11 Solutions

# Week 11 Solutions - Week 11 Solutions Chapter 17 3....

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Week 11 Solutions Chapter 17 3. Assumptions: i) Everything in real dollars. ii) Provide 40,000 after-tax to age 90 or 95. High odds one of them will die sooner, reducing costs. Thus, if Elizabeth and Bruce retire at age 60, check needs for 30 and 35 years. iii) CPP will be maximum (plan doesn't collapse). If they retire at 60, they take the reduced amount, rather than deferring receipt until age 65. iv) Before-tax real returns: equity 6%; T-bills 2%. v) All saving done in RRSPs so that no tax on investment income until retirement and we use before-tax rate of return. vi) Retirement income split equally. vii) Switch Bruce’s mutual fund into an RRSP using contribution room carried forward. Assume the capital gain on deemed disposition is cancelled by the tax refund (not a material effect in any case). viii) They live in Ontario. How Much Have They Got? From Table 17.4 Maximum CPP at age 65: \$828.75; Maximum OAS: \$473.65 CPP, retire at age 60: 828.75 * .7 * 12 * 2 = 13,923 p.a. CPP retire at age 65: 828.75 * 12 * 2 = 19,890 p.a. OAS 473.65 * 12 = 5,683.80 each from age 65.

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## This note was uploaded on 10/14/2011 for the course ADMS 3541 taught by Professor Staff during the Winter '10 term at York University.

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Week 11 Solutions - Week 11 Solutions Chapter 17 3....

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