Retirement Goal Plan Assignment-15% Melani and Ryan Raza, both age 40 have come to see you, their financial planner to develop a retirement plan. Melani works full time at an Accounting Firm earning $97,000 a year after taxes and deductions and Ryan works full time as a Software Engineer earning $130,000 after taxes and deductions. The Raza's have one child, Rachel, who is 8 years old. The Raza's have not yet put any savings aside for Rachel's post secondary education but would like to start. In addition, The Raza's live in a townhouse in Mississauga that is worth $1.2 million and has $200,000 remaining on the mortgage which is on track to be paid off in 12 years. The Raza's also share a four year old Volvo SUV that is valued at $38,000 and has no existing loan balance. Regarding retirement, the couple would like to retire at 65 and want to ensure they are on track towards a comfortable retirement which would require the couple to have 1.6 million, combined in savings at age 65. Melani and Ryan were both born in Toronto and have always resided in Canada. In addition, both Melani and Ryan have been employed full time since graduating from College at age 21 with the exception of Melani taking a year off of work during her maternity leave. Please keep in mind the following: The chequing Account balance is seen by the couple as an emergency fund, and therefore they don't want it included in calculations for Retirement Income. The Raza's have an abundance of questions for you and have requested you to determine if they're on the right path towards achieving their retirement goal. During the meeting, the couple has provided you with the following information that better captures their current financial situation. Monthly Expenses (Joint): Mortgage Payment: $1500 Home maintenance: $300 Utilities: $280 Property Taxes $480 Auto Insurance: $160 Gas: $360 Food: $1400 Clothing: $380 Internet/Cell phone bills: $260 Dining out & Entertainment: $560 Vacations $1,600 Monthly Contributions to Registered Savings Accounts: Melani and Ryan each contribute $250 per month to their RRSP accounts. Assets (Joint) Principal Residence: $1,200,000 SUV: $38,000 Chequing Account: $20,000 Savings Account: (earning 3% per year compounded annually): $250,000 Debt (Joint) Mortgage: $200,000 Melani's Assets TFSA: $30,000 (earning 3% per year compounded annually) RRSP $80,000 (earning 3% per year compounded annually) Ryan's Assets: TFSA: $60,000 (earning 3% per year compounded annually) RRSP: $100,000 (earning 3% per year, compounded annually) Assignment Instructions - Answer the following questions: 1. As the Raza's Financial Planner, are they on the right track to reach their retirement goal? Using TVM Calculations, determine at the current savings rate how close to the goal of 1.6 million at retirement the clients are projected to achieve. (3 marks) MODE P/Y C/Y N I/Y PV PMT FV 2. The Raza's are wondering what RRSP maturity option would provide them with flexibility and the ability to maintain control over how their funds are invested at retirement. Provide the Raza's with an overview on which RRSP maturity option would best fit their needs and why. (Your response should be between 3-4 sentences long). (3 marks) 3. The Raza's have questions about Old Age Security. Provide a brief explanation on what OAS is and how one can be eligible for the maximum OAS benefit. (Your response should be between 2-3 sentences long). (2 marks) 4. After analyzing the Raza's respective RRSPS and TFSAs, you notice that they have not designated beneficiaries on either accounts. The Raza's mention they're unsure of what a beneficiary is and ask you to provide some clarification. In 3-4 sentences, help the Raza's understand what a beneficiary is and how failing to designate a beneficiary on their registered accounts would affect their estate plan. (3 marks) 5. After reviewing the Raza's financial situation, provide 2 recommendations to the couple that would optimize their retirement goal plan. Be sure to elaborate on how your recommendations can be implemented as well as how your recommendations would support the Raza's retirement plan. (Your response should be between 4-6 sentences long). (4 marks)