RETIREMENT PLAN KAREN AND BILL SWIRE PROVINCE OF ONTARIO AS AT JANUARY 1, 2012 PREPARED BY DAVID GOBEIL, CA, CFP NOVEMBER 4, 2011 VERSION DRAFT Sample retirement plan prepared with The Canadian Retirement Planner s Software For information visit http://www.gobeil.ca/
Karen and William Swire 123 Main Street Anywhere, Canada Dear Karen and Bill, Personal Financial Planner's Comments This Retirement Plan has been prepared solely for your use in arranging your financial affairs to progress towards meeting your retirement objectives. I have prepared this Retirement Plan, which includes projections of post-retirement incomes from information and assumptions supplied by you. The assumptions used are not certain to occur and other events not reflected in the assumptions may occur. If events do not occur as assumed, the actual results achieved may vary significantly from the projected outcome. Your objective is essentially to maintain lifestyle expenditures of $85,000 per year in current dollars plus some inflation protection. Based upon the assumptions in the plan, you should be able to meet your objective by making the contributions to your RRSPs and TFSAs, and saving small amounts of tax-paid capital as specified in the enclosed Annual Savings Plans. However, you may find that making the maximum contributions to your RRSPs and TFSAs does not leave you with the funds that you want for your lifestyle before retirement. You should also consider that, once you have the mortgage paid off and your children have completed their post-secondary educations, you will have lower expenditures and will be able to more readily save for retirement. Retirement planning is an ongoing activity and we should review your plan every couple of years, determining your investment returns and reconsidering your expectations for retirement. You will appreciate that tax-planning advice is based upon interpretation of the law including the general antiavoidance rule and experience with the revenue authorities. Accordingly, the conclusions reached and views expressed are often matters of opinion, rather than certainty. Yours very truly, David David Gobeil, CA, CFP November 15, 2011 Page 2
This retirement plan has been prepared for: INDEX 1. Action Plan 2. Retirement Objectives 3. Assumptions About the Future 4. Annual Savings Planned for Retirement 5. Accumulation Plan for Retirement 6. Graphs of Income Projections 7. Summary Income Projections 8. Detailed Income Projections 9. Income Tax Projections 10. Strategies to Meet Your Objectives Date of Birth Age Karen May 31, 1965 46 Bill January 12, 1964 47 1. Action Plan The actions identified to meet your objectives are: From Section # Action Implementation 4 Bill should make maximum Bill by March 1 of each RRSP contributions to a year spousal RRSP 4 Karen should make maximum Karen by March 1 of each RRSP contributions to her RRSP year 4 Consider the level of savings Bill & Karen to discuss by required and trade off with August 30 current expenditures 2. Retirement Objectives The purpose of the retirement plan is to determine how you can use your financial resources to meet your retirement objectives, which are: to accumulate the funds to retire when Bill is turning 62 years of age; and to be able to maintain your standard of living as measured by lifestyle expenditures of $85,000 per year in current dollars plus some inflation protection of say 2.5%. November 15, 2011 Page 3
3. Assumptions about the Future The assumptions upon which the plan has been prepared follow. KAREN AND BILL SWIRE ASSUMPTIONS FOR RETIREMENT PLAN AS AT JANUARY 1, 2012 BILL KAREN Dates of birth and years of retirement Date of birth January 12, 1964 May 31, 1965 Age at January 1, 2012 (years//days) 47//354 46//215 Number of years before retirement 18 18 Age at retirement (years//days) 65//354 64//215 Number of years of retirement 26 28 Age at end of retirement planning period 91//354 92//215 Employer pensions Date at which pension payments commence January 1, 2027 Age at which pension payments commence 61//216 Annual pension income at that age $6,500 Indexation of pension income (if any) 3.00 % Survivor's benefit 60.00 % Government pensions (in current dollars) Date CPP/QPP payments commence January 13, 2024 May 31, 2030 Age at which pension payments commence 60//0 65//0 Maximum retirement benefit at 65 years of age $11,799 $11,799 Adjustment for early of late commencement -36.00 % 0.00 % CPP/QPP retirement benefits in current dollars $7,551 $11,799 Age at which OAS payments commence 65//000 65//000 Month that Old Age Security payments commence March 3, 2029 June 1, 2030 Old Age Security in current dollars $6,442 $6,442 Tax-Free Savings Accounts $12,000 $11,000 Investment return on TFSAs 5.00 % 5.00 % Value of current TFSAs at first year of retirement $28,879 $26,473 Carryforward of TFSA contribution room from last year $5,000 $5,000 Survivor's benefit 100.00 % 100.00 % Registered Retirement Savings Plans $65,000 $72,000 Investment return on RRSPs 8.00 % 6.00 % Value of current RRSPs at first year of retirement $259,741 $205,512 Carryforward of RRSP contribution room from last year $28,900 $12,500 Survivor's benefit 100.00 % 100.00 % Tax-Paid Capital $140,000 $25,000 After-tax investment return until retirement 5.00 % 5.00 % Value of current savings at retirement $336,927 $60,165 Adjusted cost base of current savings at retirement $120,000 $22,000 Survivor's benefit 100.00 % 100.00 % Allocation of tax-paid capital to fixed income 10.00 % 20.00 % Rate of interest on fixed income after retirement 3.00 % 3.00 % Allocation of tax-paid capital to equity investments 90.00 % 80.00 % Rate of eligible dividends on equities 4.00 % 4.00 % November 15, 2011 Page 4
BILL KAREN Rate of appreciation of equities 8.00 % 7.00 % Rate of turnover of equities 50.00 % 100.00 % Lifestyle Expenditures At retirement in current dollars $85,000 Inflation expected - Consumer Price Index 3.00 % Inflation protection during retirement 2.50 % When age of Bill at January 1 is 80 change the inflation protection to 1.00 % Earned income Current earned income before tax $85,000 $46,500 Annual increase in income expected 4.00 % 3.00 % Projected income at first year of retirement $172,200 $79,200 Principal Residence It is assumed you sell your home in 2037, 25 years from now, and rent accommodation. Current value of principal residence $185,000 Ownership interests of spouses 50.00 % 50.00 % Annual rate of appreciation expected 4.00 % Value at first year of retirement $374,776 Year of sale of principal residence 2037 Proceeds of sale $493,180 Change in lifestyle expenditures in the year of sale - in current dollars $50,000 - in future dollars $104,689 Other Capital Property Twenty years ago, Bill inherited his father s cottage when it had a fair market value of $13,524, which is his adjusted cost base (ACB) of $13,524. The cottage has a current fair market value of $95,000. It is assumed you sell the cottage in 2037 for $253,254. The sale will result in a taxable capital gain of about $120,000, calculated as ((proceeds ACB) capital gains inclusion rate of 50%) or (($253,254 - $13,524) 50%). First capital property Description of property Cottage Year of sale of property 2037 Current value of property $95,000 Annual rate of appreciation expected 4.00 % Proceeds of sale $253,254 Taxable capital gain (allowable loss) $120,000 Non-taxable proceeds of sale $133,254 November 15, 2011 Page 5
Defined-Benefit Pension Plan BILL KAREN The following schedule includes the factors for Karen s pension plan, which will provide a pension of $24,076 at retirement. It is assumed that you have a survivor s benefit for Bill. Current pensionable earnings (PE) - Max. $130,699 $45,000 Annual increase in PE expected 3.00 % Years of service at retirement 28.00 Date to retire from plan membership January 1, 2028 Age to retire from plan membership 62//215 Pension benefit per year of service - for earnings below the YMPE 1.30 % - for earnings above the YMPE 2.00 % Number of years averaged for final PE 5 Average final pensionable earnings $66,142 Number of years averaged for final YMPE 3 Average final YMPE at retirement $85,708 Maximum annual pension income at retirement $24,076 Pension benefits taken as: Pension Option 1 - Purchase a pension: Date at which pension payments commence January 1, 2028 Age at which pension payments commence 62//215 Maximum annual pension income at retirement $24,076 Annual pension with any survivor's benefits $24,076 Bridging supplement to age 65 $3,000 Indexation of annual pension income (if any) 3.00 % Survivor's benefit 60.00 % Defined-Contribution Pension Plan BILL KAREN The following schedule includes the factors for Bill s pension plan. At retirement, Bill will have about $425,000. The funds can be transferred to a locked-in retirement account and an RRSP in order to give you the greatest flexibility in their use. Current pensionable earnings (PE) $78,000 Annual increase in PE expected 4.00 % Date to retire from plan membership January 1, 2027 Age to retire from plan membership 62//355 Current combined contribution rate 10.00 % When employee reaches age 60 change the contribution rate to 15.00 % Reduction in the contribution rate for PE 3.60 % up to the YMPE (if any) Current savings in defined-contribution plan $92,000 Investment return on these savings 6.00 % Projected savings at retirement from plan membership $424,949 Pension benefits taken as: LIRA November 15, 2011 Page 6
Option 2 - Transfer to Locked-In Retirement Account BILL KAREN Date at which to transfer pension benefits January 1, 2027 Age at which to transfer pension benefits 62//355 Total savings in the plan at this age $424,949 Amount to transfer to Locked-in Retirement Account $212,475 Amount to transfer to non-locked-in RRSP $212,474 Locked-In Retirement Accounts (LIRAs) Investment return on LIRAs, LIFs and LRIFs 6.00 % Defined-contribution pension plan Age at which to transfer pension benefits 62//355 Amount to Locked-in Retirement Account $212,475 Savings in LIRAs at first year of retirement $253,062 On death are the funds still locked-in? No Mature Locked-in Retirement Accounts as Life LIF Income Fund or Locked-in Retirement Income Fund Option 1 - Life Income Fund (LIF) Interest rate for maximum withdrawal (CANSIM) 6.00 % Do you wish to withdraw the maximum amount? Yes Date at which to start maximum withdrawal (if any) January 1, 2027 Age at which to start maximum withdrawal 62//355 Age at which to annuitize (if any) 81 Number of years over which to amortize savings 12 Amount of income per $1,000 of savings $115.85 Annual indexation of annuity payments (if any) 0.00 % Survivor's benefit for capital or annuity 100.00 % INCOME TAX CREDITS Disability tax credit No Yes Age at which disability tax credit commences 63 Amount in current dollars for donations tax credit $500 Indexation of amount for donations tax credit (if any) 2.00 % November 15, 2011 Page 7
4. Annual Savings Planned for Retirement Your saving plan for retirement is included in the following schedule, which shows your contribution room to Registered Retirement Savings Plans (RRSPs), your planned annual RRSP contributions, your contribution room for Tax-free Savings Accounts (TFSAs), your planned annual TFSA contributions, and any additional savings as tax-paid capital. You can deduct RRSP contributions from your taxable income even if the contribution is made to a spousal RRSP. Accordingly, the after-tax cost of accumulating the savings in RRSPs may be as little as 50% of the amount required. KAREN AND BILL SWIRE ANNUAL SAVINGS PLAN FOR BILL AS AT JANUARY 1, 2012 < Registered Retirement Savings Plan > < Tax-Free Savings Account > < Tax-Paid Carry New Own Spousal Carry New Capital > Year forward room RRSP RRSP forward room Savings Savings 2012 $28,900 - $0 $8,800 $5,000 - $5,000 $1,900 2013 20,100 $9,281 0 9,281 0 $5,500 5,500 1,900 2014 20,100 9,652 0 9,652 0 5,500 5,500 1,900 2015 20,100 10,038 0 10,038 0 5,500 5,500 1,900 2016 20,100 10,439 0 10,439 0 6,000 6,000 1,900 2017 20,100 10,857 0 10,857 0 6,000 6,000 1,900 2018 20,100 11,292 0 11,292 0 6,500 6,500 1,900 2019 20,100 11,743 0 11,743 0 6,500 6,500 1,900 2020 20,100 12,213 0 12,213 0 6,500 6,500 1,900 2021 20,100 12,701 0 12,701 0 7,000 7,000 1,900 2022 20,100 13,210 0 13,210 0 7,000 7,000 1,900 2023 20,100 13,738 0 13,738 0 7,500 7,500 1,900 2024 20,100 14,288 0 14,288 0 7,500 7,500 1,900 2025 20,100 14,859 0 14,859 0 8,000 8,000 1,900 2026 20,100 8,960 0 15,400 0 8,000 8,000 1,900 2027 13,660 9,318 0 16,000 0 8,500 8,500 1,900 2028 6,978 27,554 0 16,600 0 8,500 8,500 1,900 2029 17,932 28,657 0 17,200 0 9,000 9,000 1,900 Savings to January 1, 2030 $0 $228,311 $124,000 $34,200 Value at January 1, 2030 $0 $356,051 $195,052 $56,124 November 15, 2011 Page 8
KAREN AND BILL SWIRE ANNUAL SAVINGS PLAN FOR KAREN AS AT JANUARY 1, 2012 < Registered Retirement Savings Plan > < Tax-Free Savings Account > < Tax-Paid Carry New Own Spousal Carry New Capital > Year forward room RRSP RRSP forward room Savings Savings 2012 $12,500 - $3,600 $0 $5,000 - $5,000 $0 2013 8,900 $3,705 3,705 0 0 $5,500 5,500 0 2014 8,900 3,798 3,798 0 0 5,500 5,500 0 2015 8,900 3,894 3,894 0 0 5,500 5,500 0 2016 8,900 3,993 3,993 0 0 6,000 6,000 0 2017 8,900 4,095 4,095 0 0 6,000 6,000 0 2018 8,900 4,199 4,199 0 0 6,500 6,500 0 2019 8,900 4,307 4,307 0 0 6,500 6,500 0 2020 8,900 4,419 4,419 0 0 6,500 6,500 0 2021 8,900 4,533 4,533 0 0 7,000 7,000 0 2022 8,900 4,651 4,651 0 0 7,000 7,000 0 2023 8,900 4,773 4,773 0 0 7,500 7,500 0 2024 8,900 4,898 4,898 0 0 7,500 7,500 0 2025 8,900 5,027 5,027 0 0 8,000 8,000 0 2026 8,900 5,160 5,160 0 0 8,000 8,000 0 2027 8,900 5,296 5,296 0 0 8,500 8,500 0 2028 8,900 5,437 5,437 0 0 8,500 8,500 0 2029 8,900 13,431 5,600 0 0 9,000 9,000 0 Savings to January 1, 2030 $81,385 $0 $124,000 $0 Value at January 1, 2030 $129,151 $0 $195,052 $0 5. Accumulation Plan for Retirement Your current savings for retirement and your additional savings planned until retirement should accumulate to the amount of funds that you require for retirement. As you approach retirement, you will want to monitor your savings to determine that there is no significant shortfall. Your accumulation plan for retirement specifies the amount of funds that you would like to have accumulated at the end of each year until retirement. The savings plan was prepared based upon your RRSP and TFSA contribution room and your ability to save for retirement. These amounts should be adequate to meet your retirement objectives. November 15, 2011 Page 9
The following graph(s) illustrate your Accumulation Plan for Retirement. November 15, 2011 Page 10
The following table(s) illustrates your Accumulation Plan for Retirement. KAREN AND BILL SWIRE ACCUMULATION PLAN WITH CURRENT AND ANNUAL SAVINGS AS AT JANUARY 1, 2012 Balance Tax-Free Other RRSPs Locked-in End of Savings Tax-Paid & Retirement Other Year Account Capital RRIFs Account Assets 2011 $23,000 $165,000 $137,000 $0 $280,000 2012 34,397 173,250 189,144 0 291,200 2013 47,388 181,913 215,266 0 302,848 2014 61,030 191,008 243,546 0 314,962 2015 75,353 200,559 274,141 0 327,560 2016 91,417 210,586 307,216 0 340,663 2017 108,284 221,116 342,954 0 354,289 2018 127,019 232,172 381,543 0 368,461 2019 146,691 243,780 423,188 0 383,199 2020 167,347 255,969 468,109 0 398,527 2021 190,060 268,768 516,538 0 414,468 2022 213,908 282,206 568,725 0 431,047 2023 239,974 296,316 624,938 0 448,289 2024 267,343 311,132 685,461 0 466,221 2025 297,106 326,689 750,599 0 484,869 2026 328,356 343,023 813,990 0 504,264 2027 362,194 360,174 1,111,471 225,224 524,435 2028 397,723 378,183 1,221,169 238,737 545,412 2029 436,054 397,092 1,347,538 253,062 567,229 November 15, 2011 Page 11
6. Graphs of Income Projections The following graphs present the sources and uses of funds. November 15, 2011 Page 12
7. Summary Income Projections Post-retirement income projections are included in the accompanying schedules. The target income is adjusted for the protection you require from inflation and the funds available indicate whether or not there is any shortage of income and savings. The following schedule includes a summary of your income projections for the first six years of retirement. You can also have these schedules for your entire planned period of retirement if you wish. KAREN AND BILL SWIRE PROJECTIONS OF RETIREMENT INCOMES BASED UPON CURRENT AND ANNUAL SAVINGS AS AT JANUARY 1, 2012 2030 2031 2032 2033 2034 2035 Retirement Funds / Ages 65 & 64 66 & 65 67 & 66 68 & 67 69 & 68 70 & 69 Employment & business income $0 $0 $0 $0 $0 $0 Pension incomes 33,971 33,624 34,633 35,672 36,742 37,844 Canada (Quebec) Pension Plan 24,572 33,931 34,949 35,997 37,077 38,189 Old Age Security 6,397 11,296 11,635 11,984 12,344 12,714 Funds from RRSPs, RRIFs & LIRAs 15,340 15,518 15,700 15,884 16,071 16,261 Income from tax-paid capital 106,297 47,308 28,882 23,135 16,939 11,822 Taxable income 186,577 141,677 125,799 122,672 119,173 116,830 Income taxes (27,995) (11,255) (7,196) (6,338) (5,715) (5,370) Funds from tax-free savings accounts (19,000) (19,000) (10,000) (10,000) (10,500) (11,000) Funds from tax-paid capital 96,880 72,058 62,015 64,137 67,197 70,765 Adjustments for tax-paid capital (91,755) (35,156) (18,585) (14,637) (10,426) (7,502) Retirement funds $144,707 $148,325 $152,033 $155,834 $159,729 $163,723 Assets at beginning of year Tax-free savings accounts $445,456 $487,198 $531,027 $567,825 $606,463 $647,545 Other tax-paid capital 453,216 374,300 317,243 268,014 214,512 155,475 RRSPs & RRIFs 1,035,553 1,087,331 1,141,697 1,198,782 1,258,722 1,321,658 Locked-In retirement accounts 227,009 224,836 222,349 219,527 216,346 212,781 Other assets 567,229 589,918 613,515 638,055 663,577 690,120 Total $2,728,463 $2,763,583 $2,825,831 $2,892,203 $2,959,620 $3,027,579 Target retirement Income Retirement funds $144,707 $148,325 $152,033 $155,834 $159,729 $163,723 After-tax shortfall 0 0 0 0 0 0 Target retirement Income $144,707 $148,325 $152,033 $155,834 $159,729 $163,723 Income Taxes Federal tax on taxable income $31,145 $21,252 $18,870 $18,400 $17,876 $17,524 Tax credits (11,121) (13,203) (13,726) (13,968) (13,947) (13,892) Total federal tax 20,024 8,049 5,144 4,432 3,929 3,632 Provincial tax on taxable income 11,671 7,400 6,352 6,194 6,018 5,900 Provincial tax credits (3,700) (4,194) (4,300) (4,288) (4,232) (4,162) Total provincial tax 7,971 3,206 2,052 1,906 1,786 1,738 Total $27,995 $11,255 $7,196 $6,338 $5,715 $5,370 November 15, 2011 Page 13
8. Detailed Income Projections The following schedules include detailed income projections for the first six years of retirement. You can have these schedules for your entire planned period of retirement if you wish. KAREN AND BILL SWIRE PROJECTIONS OF RETIREMENT INCOMES BASED UPON CURRENT AND ANNUAL SAVINGS AS AT JANUARY 1, 2012 2030 2031 2032 2033 2034 2035 Retirement funds from Bill / Age 65 66 67 68 69 70 Employment & business income $0 $0 $0 $0 $0 $0 Canada (Quebec) Pension Plan 12,855 13,241 13,638 14,047 14,468 14,902 Minimum LRIF/LIF withdrawal or annuity 8,731 8,993 9,265 9,545 9,834 10,132 Excess withdrawal from LRIF/LIF 6,609 6,525 6,435 6,339 6,237 6,129 Income from tax-paid capital 84,385 44,108 26,561 23,133 16,939 11,822 Taxable income 112,580 72,867 55,899 53,064 47,478 42,985 Pension income split with spouse (7,670) (2,029) 7,001 8,272 12,109 15,430 Adjusted taxable income 104,910 70,838 62,900 61,336 59,587 58,415 Income taxes (16,905) (5,523) (3,589) (3,277) (3,272) (3,435) Funds from (to) tax-free savings account (9,500) (9,500) (10,000) (10,000) (10,500) (11,000) Funds from (to) tax-paid capital 87,380 62,558 15,808 64,132 67,197 70,765 Adjustments for tax-paid capital (71,802) (33,656) (17,044) (14,635) (10,426) (7,502) Retirement funds $94,083 $84,717 $48,076 $97,556 $102,586 $107,243 Assets of Bill at beginning of year Tax-free savings accounts $223,931 $244,862 $266,840 $290,429 $315,197 $341,716 Other tax-paid capital 393,051 321,416 271,931 268,009 214,512 155,475 RRSPs & RRIFs 377,074 395,928 415,724 436,510 458,336 481,253 Locked-In retirement accounts 227,009 224,836 222,349 219,527 216,346 212,781 Other assets 379,841 395,034 410,836 427,269 444,360 462,134 $1,600,906 $1,582,076 $1,587,680 $1,641,744 $1,648,751 $1,653,359 Retirement funds from Karen / Age 64 65 66 67 68 69 Employment & business income $0 $0 $0 $0 $0 $0 Pension incomes 33,971 33,624 34,633 35,672 36,742 37,844 Canada (Quebec) Pension Plan 11,717 20,690 21,311 21,950 22,609 23,287 Old Age Security 6,397 11,296 11,635 11,984 12,344 12,714 Income from tax-paid capital 21,912 3,200 2,321 2 0 0 Taxable income 73,997 68,810 69,900 69,608 71,695 73,845 Pension income split with spouse 7,670 2,029 (7,001) (8,272) (12,109) (15,430) Adjusted taxable income 81,667 70,839 62,899 61,336 59,586 58,415 Income taxes (11,090) (5,732) (3,607) (3,061) (2,443) (1,935) Funds from (to) tax-free savings account (9,500) (9,500) 0 0 0 0 Funds from (to) tax-paid capital 9,500 9,500 46,207 5 0 0 Adjustments for tax-paid capital (19,953) (1,499) (1,541) (2) 0 0 Retirement funds $50,624 $63,608 $103,958 $58,278 $57,143 $56,480 Assets of Karen at beginning of year Tax-free savings accounts $221,525 $242,336 $264,187 $277,396 $291,266 $305,829 Other tax-paid capital 60,165 52,884 45,312 5 0 0 RRSPs & RRIFs 658,479 691,403 725,973 762,272 800,386 840,405 Other assets 187,388 194,884 202,679 210,786 219,217 227,986 $1,127,557 $1,181,507 $1,238,151 $1,250,459 $1,310,869 $1,374,220 Retirement funds from Bill $94,083 $84,717 $48,076 $97,556 $102,586 $107,243 Retirement funds from Karen 50,624 63,608 103,958 58,278 57,143 56,480 After-tax shortfall (surplus) 0 0 0 0 0 0 Target Retirement Income $144,707 $148,325 $152,033 $155,834 $159,729 $163,723 November 15, 2011 Page 14
9. Income Tax Projections The following schedules include income tax projections for the first six years of retirement. You can also have these schedules for your entire planned period of retirement if you wish. KAREN AND BILL SWIRE PROJECTIONS OF RETIREMENT INCOMES BASED UPON CURRENT SAVINGS AS AT JANUARY 1, 2012 2030 2031 2032 2033 2034 2035 Income Taxes for Bill / Age 65 66 67 68 69 70 Taxable Income $112,580 $72,867 $55,899 $53,064 $47,478 $42,985 Pension Income Split with Spouse (7,670) (2,029) 7,001 8,272 12,109 15,430 Adjusted Taxable Income $104,910 $70,838 $62,900 $61,336 $59,587 $58,415 Federal Tax on Taxable Income $18,129 $10,626 $9,435 $9,200 $8,938 $8,762 Personal Tax Credit (2,688) (2,769) (2,852) (2,937) (3,026) (3,116) Age Tax Credit Allowed (571) (1,426) (1,695) (1,824) (1,879) (1,935) Pension Income Tax Credit (300) (300) (300) (300) (300) (300) Donations Tax Credit (179) (183) (187) (192) (196) (201) Federal dividend tax credit (2,378) (1,975) (1,799) (1,606) (1,231) (816) Total Federal Tax 12,013 3,973 2,602 2,341 2,306 2,394 Provincial Tax on Taxable Income 6,899 3,700 3,176 3,097 3,009 2,950 Provincial Personal Tax Credit (821) (846) (871) (897) (924) (952) Provincial Age Tax Credit Allowed (35) (324) (412) (438) (451) (465) Provincial Pension Income Tax Credit (67) (67) (67) (67) (67) (67) Provincial Donations tax credit (69) (70) (72) (74) (76) (77) Provincial dividend tax credit (1,015) (843) (767) (685) (525) (348) Basic Provincial Tax 4,892 1,550 987 936 966 1,041 Total Income Tax $16,905 $5,523 $3,589 $3,277 $3,272 $3,435 Income Taxes for Karen / Age 64 65 66 67 68 69 Taxable Income $73,997 $68,810 $69,900 $69,608 $71,695 $73,845 Pension Income Split with Spouse 7,670 2,029 (7,001) (8,272) (12,109) (15,430) Adjusted Taxable Income $81,667 $70,839 $62,899 $61,336 $59,586 $58,415 Federal Tax on Taxable Income $13,016 $10,626 $9,435 $9,200 $8,938 $8,762 Personal Tax Credit (2,688) (2,769) (2,852) (2,937) (3,026) (3,116) Age Tax Credit Allowed 0 (1,426) (1,695) (1,824) (1,879) (1,935) Pension Income Tax Credit (300) (300) (300) (300) (300) (300) Disability Tax Credit (1,875) (1,931) (1,989) (2,048) (2,110) (2,173) Federal dividend tax credit (142) (124) (57) 0 0 0 Total Federal Tax 8,011 4,076 2,542 2,091 1,623 1,238 Provincial Tax on Taxable Income 4,772 3,700 3,176 3,097 3,009 2,950 Provincial Personal Tax Credit (821) (846) (871) (897) (924) (952) Provincial Age Tax Credit Allowed 0 (324) (412) (438) (451) (465) Provincial Pension Income Tax Credit (67) (67) (67) (67) (67) (67) Provincial Disability tax credit (663) (683) (704) (725) (747) (769) Provincial dividend tax credit (142) (124) (57) 0 0 0 Basic Provincial Tax 3,079 1,656 1,065 970 820 697 Total Income Tax $11,090 $5,732 $3,607 $3,061 $2,443 $1,935 November 15, 2011 Page 15
10. Strategies to Meet Your Objectives The purpose of the retirement plan is to determine how you can use your financial resources to meet your retirement objectives which are: to accumulate the funds to retire when Bill is 62 years of age; and to be able to maintain your standard of living as measured by lifestyle expenditures of $85,000 per year in current dollars plus some inflation protection. Based upon the assumptions in the plan, you should be able to meet your objective by making the contributions to your RRSPs and TFSAs, and saving small amounts of tax-paid capital as specified in the enclosed Annual Savings Plans. Based upon the assumptions in the plan, the savings program should enable you to maintain lifestyle expenditures of $85,000 per year in current dollars plus some inflation protection. There is obviously a tradeoff between current expenditures and expenditures after retirement that you need to discuss and consider. November 15, 2011 Page 16