Case Mr. & Mrs. Magee - Age 45

Joseph and Grace Magee are both 45 years of age.

They met each other at the age of 22 while attending university, in Toronto.They have both lived in Toronto their entire lives.

The Magee's are meeting with you, as their financial advisor, to review their retirement plan.

Joseph and Grace have been married for 20 years.

Joseph and Grace are very concerned about saving for retirement.

Both their parents are currently struggling to retire, at the age of 65.

Joseph's grandparents are living and are between the ages of 85 and 90.

Grace's grandparents have passed away; they passed before the age of 80.

Their main concerns are:

oThey want to retire with enough income to live comfortably

oThey want to ensure that should either of them pass away, the surviving spouse has sufficient income to continue living a comfortable lifestyle; unlike their parents who struggle with making ends meet.

Joseph is currently working for KPMG as an accountant earning $75,000 annually.He has been with KPMG for the past 10 years, and believes is job is stable.

Grace is a teacher and works for the public school board earning $65,000 annually. Grace has been working as a fully time teacher for the past 15 years.

The Magee's are excellent savers and they have been contributing to their RRSPs every year; $5,000 for Joseph and $4,000 for Grace.

Joseph has $50,000 in his RRSP account.This total was $58,000; however, there was a drop in the market, last quarter that caused is portfolio to drop as well.

Grace has $40,000 in her RRSP account.She has her RRSP savings in short term GIC's.

The Magee's also have $5,000 each saved in a TFSA account, invested in GIC's.

The Magee's other assets consist of:

oSavings account $8,000

oHome worth $980,000, with an outstanding mortgage of $300,000 -with a current rate of 2.75% which they just renewed for an additional 5 years.

Joseph Grace

Age 45 45

Salary (frozen last 3 years) $75,000 $65,00

Years of Service 10 15

Type of Plan DBPP DBPP

Pension Formula: DBPP

% of final average earnings per year of service: Up to YMPE:1.25% 1.00%

Above YMPE: 2.00% 1.50%

Indexing Yes Yes

Survivor Benefit on Pensions 60% 65%

TFSAs $5,000 $5,000

RRSPs $50,000. $40,000

Investment Returns 6% annually 6% annually

Inflation Rate 2% per year 2% per year

Marginal Tax Rate 28% 26%

Respond to the following questions:

4.What additional sources of income will the Magee's be able to draw on for retirement? Explain each source in detail, project out each value to age 65 and assume they will retire at the NRA.

I.Government Pensions:

What additional sources of income will the Magee's be able to draw on for retirement? Explain each source in detail, project out each value to age 65 and assume they will retire at the NRA.

II.Employer Pensions:

What additional sources of income will the Magee's be able to draw on for retirement? Explain each source in detail, project out each value to age 65 and assume they will retire at the NRA.

III.Personal Savings:

Total Retirement Amounts from all three sources:

I.Government:

II.Company:

III.Personal Savings