Margot, $44,$ and Craig, $43,$ plan to retire when Margot reaches age $61$ and Craig reaches age $60.$

They estimate that they will need $$67,500$ per year after$-$tax in retirement. They would like to leave

some room for contingencies and therefore would like to plan for about $$72,500$ per year or

$$36,250$ each after$-$tax. They currently have $$98,700$ saved in their RRSPs$.$ Margot expects to

receive a CPP benefit of $$10,680/$year$.$ Craig expects to receive a CPP pension benefit of

$$9,600$ per year. Each of them will receive the maximum OAS benefit, starting at age $65.$ CPP and

OAS are both indexed for inflation. Craig will also receive an indexed pension benefit of

$$39,780$ per year and a non$-$indexed pension benefit of $$8,100$ per year. Their expected nominal rate

of return before and during retirement is $10\mathrm{.}00\%$ and $7\mathrm{.}00\%,$ respectively. The annual inflation

rate is expected to be $3\mathrm{.}00\%$ during the entire planning period. Margot and Craig would like to

plan for a retirement that will last for $35$ years. Their average tax rate in retirement is $25\%.$

When completing the calculations below, convert all annual amounts to monthly. Interest is

compounded annually. Income is received at the beginning of the period.

$1.$ Use a table and$/$or timeline to describe Craig and Margot's retirement cash flows. Be as

descriptive as possible.

$2.$ Use a table to describe their nominal and real rates of return before and during retirement.

$3.$ What is their before$-$tax income need?

$4.$ What is the present value at retirement of their required retirement income before$-$tax?

$5.$ What is the present value at retirement of Margot's CPP before$-$tax?

$6.$ What is the present value at retirement of Craig's CPP before$-$tax?

$7.$ What is the present value at retirement of OAS before$-$tax? HINT: First calculate the present value at age $65$ and then discount this amount back to age $61.$

$8.$What $$is $$the $$present $$value $$at $$retirement $$of $$OAS $$before $-$tax? $$HINT: $$First $$calculate $$the $$present $$value $$at $$age $65$and $$then $$discount $$this $$amount $$back $$to $$age $60.$

$9.$ What is the present value at retirement of Craig's indexed pension benefit before$-$tax?

$10.$ What $$is $$the $$present $$value $$at $$retirement $$of $$Craig$\text{'}$s $$non$-$indexed $$pension $$benefit $$before$-$tax?

$11.$ Taking into consideration of their CPP$,$OAS, and pension plans, how much do Craig and Margo need to have saved, at retirement, from their RRSP savings?

$12.$ What is the fiture value at retirement of their RRSP savings Place the following RRSP savings plan on a timeline. NOTE: Savings are made at the end of

the period.

Lump sum amount of $$98,700$ today.

Depositing $$7,000$ at the end of year Depositing $$24,000$ from years $2$ through $9.$

Depositing $$23,000$ at the end of year $10.$

Depositing $$16,000$ from years $11$ through $17.$

$13.$ What $$is $$the $$fiture $$value $$at $$retirement $$of $$their $$RRSP $$savings$.$