QUESTION 5: Sanjay is 35, and Sandra is 34. They plan to retire at Sanjay's age 65. They have a house worth $1,000,000 in Whitby. Their monthly mortgage payment is $3,000 at a 4% interest rate compounded semiannually. They expect their mortgage loan to be paid off in 20 years. They have no other debt. Sanjay's salary is $90,000 per annum, and after taxes, CPP, EI premiums, medical insurance, employer's pension plan, etc. his take home pay is $70,000. Sandra's salary is $65,000 and after same set of deductions as Sanjay's her take home pay is $48,000. They expect their salaries to increase at the rate of inflation of 1%. Last year Sanjay saved $6,000 and Sandra $4,000. They expect to save the same amounts in the foreseeable future. They both have $40,000 (including last year savings of $10,000) together in RRSP invested in well diversified mutual funds. They do not have any other savings. They both qualify for full OAS at age 65. Each one of them qualifies for only 70% of the maximum CPP at age 65. Sanjay expects and Sandra $15,000 per annum in indexed pension when they retire at his age 65. Sanjay expects to live till his age 85 and Sandra to her age 90. Sandra is eligible to receive survivor benefit of 60% of Sanjay's CPP after his death. They expect to need 70% of their current before tax income when they retire, and 50% after his Currently well diversified mutual funds with good track record offer nominal rate of return of 5% per annum. Future rates of returns from these mutual funds are expected to remain at 5%. Advise them in their retirement planning. death. QUESTION 5: Sanjay is 35, and Sandra is 34. They plan to retire at Sanjay's age 65. They have a house worth $1,000,000 in Whitby. Their monthly mortgage payment is $3,000 at a 4% interest rate compounded semiannually. They expect their mortgage loan to be paid off in 20 years. They have no other debt. Sanjay's salary is $90,000 per annum, and after taxes, CPP, EI premiums, medical insurance, employer's pension plan, etc. his take home pay is $70,000. Sandra's salary is $65,000 and after same set of deductions as Sanjay's her take home pay is $48,000. They expect their salaries to increase at the rate of inflation of 1%. Last year Sanjay saved $6,000 and Sandra $4,000. They expect to save the same amounts in the foreseeable future. They both have $40,000 (including last year savings of $10,000) together in RRSP invested in well diversified mutual funds. They do not have any other savings. They both qualify for full OAS at age 65. Each one of them qualifies for only 70% of the maximum CPP at age 65. Sanjay expects and Sandra $15,000 per annum in indexed pension when they retire at his age 65. Sanjay expects to live till his age 85 and Sandra to her age 90. Sandra is eligible to receive survivor benefit of 60% of Sanjay's CPP after his death. They expect to need 70% of their current before tax income when they retire, and 50% after his Currently well diversified mutual funds with good track record offer nominal rate of return of 5% per annum. Future rates of returns from these mutual funds are expected to remain at 5%. Advise them in their retirement planning. death
