Getting Close.Retirement Income Options

Transcription

1 Getting Close.Retirement Income Options

2 Today s meeting How much do I need to retire? Sources of retirement income Retirement planning tools Countdown to retirement

3 How much do I need to retire?

4 How much income will you need? Your hopes and dreams?

5 Why Plan?

6 Sources of retirement income

7 Sources of retirement income 1.Government Old Age Security (OAS) Canada Pension Plan (CPP) 2. Employer Pension Plan 3. Personal Individual RSP Plans Non Registered Plans Other Savings or Assets

8 1. Government Benefits Maximum yearly amount for 2010 Old Age Security = $ 6,204 CPP/QPP* = $11,210 at age 65* = $ 7,847 at age 60* For more information visit the Service Canada web site at *Payout varies depending on years of service, salary, amount of contributions, etc.

9 1. Government Benefits Average yearly amounts for 2008* Old Age Security = $ 5,874 CPP/QPP** = $ 6,018 at age 65 = $ 4,212 at age 60 *March 2009 stats from

10 2. OCAD Pension Plan Annuity Registered Pension Plan (RPP) Life Income Fund

11 Annuity Life Term Certain Joint + Last Survivor Trading Lump Sum for Regular Income Lose Control of Your Investments Factors = Age + Current Interest Rates Life Expectancy4: Males = 77.4 Females = 82.2

12 Types of Annuities Single Life Annuity Monthly payments are payable for annuitant s life and cease upon death Highest payout

13 Types of Annuities Term Certain Payments are made to the annuitant for their lifetime If annuitant dies before the end of the guaranteed period, the payments continue to their beneficiary until the end of the guaranteed period Guarantee periods can be 5, 10, or 15 years

14 Types of Annuities Joint and last survivor After the death of the annuitant, the annuity payments continue to their spouse until the spouse s death Payments to surviving spouse can range from 60% to 100% of annuitant s payout

15 Sample annuity quotes - $100,000 premium N o Annuity Type Age 60 Age 65 Age Single life annuity with 120 payments guaranteed Joint life annuity, reducing to 60% upon death of primary annuitant, with 120 payments guaranteed Joint life annuity, continuing in full until the death of the surviving spouse, with 120 payments guaranteed $ $ $ $ $ $ $ $ $ Payment frequency: monthly Annuitant : male Co-Annuitant: female Source of funds: Registered Pension Plan (Ontario)

16 2. OCAD Pension Plan Annuity Registered Pension Plan (RPP) Life Income Fund

17 Life Income Fund (LIF) Withdraw % of Account Annually % Varies According to Age Continue to Control Investment Decisions Example: $100,000 AGE MINIMUM MAXIMUM (Annual Payments) 55 $ 2,857 $ 6, $ 3,333 $ 7, $ 4,000 $ 8, $ 5,000 $ 9, $ 7,850 $12,820

18 Life Income Fund (LIF) Date of birth: March 1, 1941 Amount invested: $100, First payment date: 15 April 2006 Type of income payment: MAXIMUM PAYMENTS 4% ROR 5% ROR 6% ROR Monthly Monthly Monthly Year Age Payments Payments Payments $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Approximate value (28/12/2021): $43, $50, $59,250.88

19 Pension legislation change for Ontario Effective January 1, 2010 You may unlock 50% of the value of your pension plan upon conversion to a Life Income Fund

20 3. Personal Savings Personal Individual RSP Plans Non Registered Plans Other Savings or Assets

21 Personal savings - RRSP Annuity RRSP Retirement Income Fund Cash

22 Retirement Income Fund (RIF) Mandatory RSP Age 71 Prescribed Minimum Payment Based on Age < 71 Years = 1/(90-Age) > 71 Years = Formula* (7.38% - 20%) Continue to Control Your Investments Example: $100,000 AGE MINIMUM (Annual Payments) 55 $ 2, $ 3, $ 4, $ 5, $ 7,850

23 Retirement Income Fund (RIF) Date of birth: 1 November 1944 Amount invested: $50, Issue date: 4 October 2004 Expected rate of return: 5.000% First payment date: 15 January 2005 Type of income payment: EQUAL PAYMENTS Year Age Monthly payments Jan 1st Value $ $50, $ $46, $ $43, $ $39, $ $34, $ $30, $ $25, $ $21, $ $16, $ $10, $ $5, The account will be exhausted with a final payment of $ on 15 November 2015

24 Retirement planning tools

25 GRS Access Account balances Provide or change investment instructions Process inter-fund transfers Retirement planning tool On-demand statements

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34 Retirement Income Illustrations You have not used our online retirement calculator to save your assumptions or preferences. Chart created using the basic information we have for you based on the previous calendar year.

35 You're not on track You've established a retirement budget. You've saved your information in the online retirement calculator. You are not on track and so you need to make adjustments to your retirement plan.

36 You are on track! You've established a retirement budget You've saved your information in the online retirement calculator. You are on track to achieving your retirement income goal!

37 So, how much do I need? Smart tools your retirement tool kit Library of articles Flexible retirement calculators Glossary of terms

38 Client Service Centre Ask to speak to one of our retirement planning specialist Provide or change investment instructions Process inter-fund transfers Update information 8:00 am to 8:00 pm (ET)

39 Statements Mailed semi-annually Personalized net rates of return Custom messages Also available on GRS Access

40 Countdown to retirement..

41 Countdown to retirement.. 3 to 5 years before retirement Will you have enough to retire? Review your investment portfolio. Know your retirement savings. Re-evaluate your lifestyle and residence needs. Estimate your living expenses. Find out what your house is worth. Estimate your retirement income.

42 Countdown to retirement.. 1 year to go Get your affairs in order. Verify your retirement milestones. Review your insurance needs. Think about estate planning.

43 Countdown to retirement.. 6 months to go The home stretch. Update beneficiary information. Apply for government pensions. Apply for company pensions. Look to available resources for help.

44 Why plan? Someone is sitting in the shade today because someone planted a tree Warren Buffet