Michelle has been a registered nurse since obtaining her RN at age 28 She has been living in Brampton since her childhood, and feels that serving the community that her parents raised her in is her way of giving back. Though she is 40 years of age, she feels that nursing does wear her out (physically and mentally) working 12 hour shifts. Like her older sister, taking full retirement at age 65 and travelling the world as a volunteer nurse would be a dream come true. She currently earns $102,000 annually today, and thinks retiring on 70% of this income to age 95 would make retirement comfortable, assuming that inflation does not exceed 2%. The Human Resources Department at the hospital confirmed that she will receive the current maximum CPP benefits ($ 13,850) and OAS ($ 7,285). Additionally, her defined benefit pension at work will pay $ 24,000 annually. Knowing that these benefits (CPP/OAS/ pension) will be indexed to the inflation rate is comforting to her. With a current balance of $ 85,000 in RRSPs, and annual contribution of $4,000/year annually, she wants to be sure that retirement at 65 is realistic. She also mentioned that she expects to get a 6% rate of return to grow the RRSP until retirement and then converting to a RRIF at 65, earning 4% conservatively each year to age 95. She wondered if it is just a dream? She would like to know if there is a shortfall, what is that number? She has come to you for assistance. Using the 5 steps below, please help her

Michelle has indicated that she will need an annual income of $_____ in today's dollars

in her first Year of retirement. Assuming an annual inflation rate of ____% , this translates

to $_____ (1)in future dollars. Michelle expects to receive the following annual income during her retirement:

Canada Pension Plan (CPP) = $ ____

Old Age Security (OAS) = $_____

Guaranteed Income Supplement (GIS) $_____

Company Pension Benefit (RPP-DB) $_____

Other Income (if any) $_____

Total = $_____

Michelles total annual retirement pension income from the above sources (when expressed in

future dollars) is expected to be $_____. (2)This income will continue for the duration of

her retirement. To meet her financial needs through _____ years of retirement, and assuming she will

continue to earn a _____% return on her RRIF investments during retirement, Michelle

will need to have saved $____ (3)by the time she retires. Under Michelles current savings plan, she will have a shortfall of $_____, as the

existing funds she has already accumulated (if any) plus her existing annual contribution (if any)

will grow and accumulate to $ ______ (4) Step 5: Your RRSP plan

In order for Michelle to meet her retirement goal, this is the additional annual deposit

of $____ (5)will be necessary in RRSP contributions.