9. Before they retire, the couple decides that they will deposit $1,100 per month at the end of each month into Marcia's RRSP. Including the current value of their RRSP, what will be the sir RRSP by the time they reach retirement age? ( 3 marks) 10. Based on your answers to the questions above, will they have enough money for retirement? EXPLAIN USING THE CALCULATIONS ABOVE. (2 marks) 11. Assuming that they do not have sufficient retirement income, what options do they have to ensure that they have sufficient money for retirement? (4 marks) 5. What is the after-tax present value at retirement, of Marty's CPP retirement pension? (2 marks) Travis? Pay that 6. What is the after-tax present value, at retirement, of Marcia's CPP retirement pension? (2 marks) 7. What is the afted-tax oresent value, at retirement, of Marty's OAS retirement income? (2 marks) 8. What is the after-tax present yalue, at retirement, of Marcia's ons retirement income? (3 marks) PART B (26 marks) Marty, age 56, and Marcla, age 53, are starting to think about retirement, Marty plans to retire at age 65 and he expects to live to age 85 . Marcla plans to retire at age 62 and she expects to live to ase 90 . They estimate that ther will need $58,000 per vear, after tax, in retirement to give them the lifestyle they want. Marty will receive an indened pensige of $30,000 per year, before-tax and Marcia will recieive a small non-indesed penaion of $7,500 per vear, before tax. from a previous employer. Marty will receive a retirement pension of $1,100 per month from the Canada Pension Plan (CPP) and $600 per month in retirement income fram the Old Age Secueity program. Maecia will receive a retirement pension of $400 per month from the Canada Pension Plan (CPP) and \$600 per month in retirement income from the Old Age Security program. CPP and OAS payments are before-tax. CPP payments begin at retirement while OAS payments begin at age 65 . Ther curremly have $140,000 in RRSPL. For planning purposes, they are using a 7.5% nominal rate of retum on savings before retirement and a 4.5N nominal rate of refurn during retirement. Inflation is expected to remain at 3N per vear throughout their lifetime. The tax rate applicable to their situation is 25%. Please ure the appropriate discount rate and mode (begin/end). 1. In percentage terms (e.s. 3.2345\%), what is their teat rate of return before and after retirement? (ROUNO TO 4 DECMMAL PLACES) (2 marks) 2. What is the after:tax present valus, at retirement, of their required retirement income need? (2 marks) rounat hes file it 3. What is the after-fax present values at retirement, of Mart/'s indexed pension? (2 marks) 4. What is the after-tax present value, at retirement, of Marcia's non-indexed pension? (2 marks)
