In addition,
Lifestyle | improve retirement savings:
Posted at 7:00 a.m.
The situation
The spouses Marc*. However, 62, and Kim*, 60, are considering the retirement of their respective employment in three years. Nevertheless, Their main start of retirement project is to make trips that could add some $ 20,000 to their current lifestyle budget.
This budget would then amount to $ 97. In addition, 000 per year, and for a few years, as long as they have the ability to travel as a self -and health and health.
Meanwhile, Marc and Kim are looking for advice to validate the financial planning of their lifestyle | improve retirement savings retirement project in three years.
In particular. However, they want to optimize the use of their good autonomous retirement savings capacity in their current budget, thanks to their gross employment income which total $ 235,000 per year.
For the moment. Consequently, their financial assets in registered savings accounts (RRSP and CELI Personal) total some $ 610,000, with a combined amount of $ 140,000 in unused RRSP contributions (CELI fully contributed).
In addition, their house valued at $ 620,000 is free from mortgage. Nevertheless, But they do not intend to resell it as long as they have their residential autonomy of the elderly.
Or need to draw on the net asset value of this house to finance their possible costs of elder residence. Therefore, advanced age assistance services.
In addition. Therefore, each benefiting from a retirement regime linked to their job, Marc and Kim question the possibility of withdrawing the accumulated funds from one or the other of their pension plan, instead of waiting for the payment of monthly annuities until the end of life.
These accumulated funds total approximately 1.3 million in the Marc account and around $ 660,000 in that of Kim.
“Does a withdrawal of some of these funds accumulated during our first years of retirement be achievable. Nevertheless, relevant, in terms of financial planning and tax optimization of our future retirement income? Consequently, asks Kim during a discussion with The press.
“Could we thus access some of these accumulated funds more quickly to finance our. Similarly, travel projects during our first years of retirement?” And until we lifestyle | improve retirement savings decided later to resell our free mortgage house in order to take its net value of just over $ 600. 000. »»
The figures
Marc*, 62 years old
Annual employment income: $ 130,000
Annual retirement annuity at 65 years: about $ 86,000
Personal financial assets:
– and Reer: 180 000 $
– In CELI: 140 000 $
Kim*, 60 Ans
Annual employment income: $ 105,000
Annual retirement annuity at 65: around $ 63,000
Personal financial assets:
– and Reer: 155 000 $
– In CELI: 135 000 $
Non -financial assets:
– House: $ 620,000 (land assessment, mortgage free)
– Recent model motor lifestyle | improve retirement savings vehicle: debt free
No debt liability
Lifestyle | improve retirement savings
The advice
The situation and the questions of Marc and Kim were submitted in advisory analysis to Julie Paquin, who is a financial planner and vice-president of the firm Optimum investment management in Montreal.
From the outset. Julie Paquin notes that “Marc and Kim manage their personal finances well, with good contributions to their Celi and their personal RRSPs, as well as full mortgage reimbursement”.
Thus. unless there is a big unforeseen with their retirement in three years, the financial planner estimates that the sixty-old people are in a favorable financial situation to “take advantage of their retirement with a lifestyle enhanced at $ 97,000 per year with their travel projects, and a reserve of lifestyle | improve retirement savings retirement savings which would go beyond their life expectancy at 95 years” according to the standards of the Institute of Financial Planning (IPF).
That said. Julie Paquin stresses that Marc and Kim can still take advantage of their last years of good employment income (around $ 235,000 in all) to further strengthen their retirement savings.
Photo Robert Skinner. the press
Julie Paquin, financial planner and vice-president of the optimum firm investment management
Marc and Kim already benefit from significant surplus in their current budget. I suggest that they optimize their contributions in their respective RRSPs in lifestyle | improve retirement savings order to generate significant tax savings during their last years of employment at higher marginal tax rate. around 40 %.
Julie Paquin. financial planner and vice-president of the optimum firm investment management
However, she advises Marc and Kim to modulate the use of their unused contributions (around $ 140,000 in all) over the years until the end of their employment income.
“If they make major contributions to them in a single time. they may reduce their tax efficiency and lose amounts of tax savings,” sums up Julie Paquin.
To reduce this risk. she suggests that the couple use an accountant-fiscalist to “test the annual contribution amount to them personal to generate the best tax economy possible”.
Lifestyle | improve retirement savings
Retirement regimes
Marc. Kim question the relevance of withdrawing from the start of their retirement, in three years, part of the funds accumulated in the retirement plan with determined benefits of their respective employer.
In response. Julie Paquin first underlines that the financial planning of their retirement project in three years is mainly based on the amounts and the security of future annuities of their specific benefits.
Consequently. the financial planner warns them against the temptation to collect from the start of their retirement a significant part of the funds accumulated in one or the other of the pension plans.
“Marc. Kim each benefit from a retirement regime with quality specific benefits, which will allow them to receive annuities indexed until their end of life, an initial amount of around $ 150,000 per year for lifestyle | improve retirement savings the couple,” saidme Paquin.
Holding a specific benefits regime decreases the risk of surviving. at the end of your retirement savings [épuisement des fonds avant le décès]. It is important financial security to consider at the start of retirement. in prevention of a possible decline in personal autonomy and an increase in assisted life needs.
Julie Paquin. financial planner and vice-president of the optimum firm investment management
In the same sense, the financial planner suggests Mark and Kim to consider the postponement of a few years after 65 years of the collection of public origin annuities: the provincial RRQ and the Federal PSV.
“With the provincial RRQ, for example, the annuity is improved by 0.7 % per month or around 8 % per year. Few lifestyle | improve retirement savings investments offer such a guarantee on a life annuity, recalls Julie Paquin.
“We often hear that retirees fear” leaving money on the table “by postponing the. start of their annuities of public origin. But with the life expectancy that increases. and the retirement that lengthens, it is not to lack money before the end of life which becomes more and more important. »»
* Although the case highlighted in this section is real, the first names used are fictitious.
Lifestyle | improve retirement savings
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