Retirement Income Splitting:

Joanne, 63 years of age is married to Steve who is 67. Both retired teachers, living together in Alberta for the last 38 years. Steve has a pension of $3,942 per month and receives CPP of $950 per month, OAS of $590 per month and RRIF income of $1,200 per month. Steve's taxable income puts him into the 30.5% marginal tax bracket. Joanne is making $1,900 per month from her pension and $450 per month from CPP. At $28,200 of income, Joanne is in the 25% marginal tax bracket (outlined below):

- CPP contributory period for Joanne is 42 years - CPP contributory period for Steve is 46 years - In 2019, the combined Federal & Alberta Income Tax Brackets were: - 25% on the first $47,630 of taxable income, plus - 30.5% on the next $47,629 of taxable income (on the portion of taxable income over 47,630 up to $95,259), plus - 36% on the next $52,408 of taxable income (on the portion of taxable income over $95,259 up to $147,667), plus - 39% on the next $62,704 of taxable income (on the portion of taxable income over 147,667 up to $210,371), plus - 43% of taxable income over $210,371

1) If Joanne & Steve share their CPP entitlements, what would their new CPP monthly payments be?

2) If Joanne & Steve shared their CPP entitlements, what else could they do to increase their after-tax retirement income?

3) By maximizing the income-splitting opportunities available to Joanne & Steve, how much income tax could your recommendations save them (i.e. how much could you improve their net cash flow) each year?

OAS Clawback:

Alfonzo is 72 years of age and had the following monthly income throughout all of 2019:

- Defined Benefit pension: $4,383.89 - CPP: $1,056.12 - OAS: $601.45 - RRIF: $708.54

- He also sold an investment property that he owned (solely in his name) for $365,000 which had an ACB of $320,000.

1) How much of Alfonzo's OAS will be clawed back over the period of July 2020 through June 2021?

Age Credit Clawback:

Jane is 76 years of age and had the following monthly income throughout all of 2019:

- Defined Benefit pension: $2,756.89

- CPP: $894.16

- OAS: $601.45 - RRIF: $1,580.00 1) How much of an Age Credit will Jane be eligible for on her 2019 income tax filing? 2) How much actual tax relief will that Age Credit provide for Jane?

Louis is 38 years of age and wants to retire when he is 65. He currently has an RRSP worth $177,090 invested in mutual funds and is receiving a return of 6% which he expects will continue until his retirement. He has always earned well over the YMPE, so he expects to receive the equivalent of $1,202/month in a CPP benefit at retirement. Louis has also lived in Canada for his entire life and understands that he will also receive the full OAS benefit of $578/month (in today's dollars) in retirement. Louis believes that he can attain a 3.0% rate of return throughout retirement. He believes that it would be best to plan until age 90 and he is comfortable using an inflation rate of 2.5% in any necessary calculations:

1) What amount must Louis accumulate inside his RRSP for him to receive a total taxable income of $4,250 (in today's dollars) at the beginning of each month throughout his retirement?

2) What amount must Louis save from his month-end paycheck in order to achieve his goal?

3) If Louis were to delay his retirement by 2 years, how much would that change reduce his savings goal and month-end savings for requirement (assuming that he wanted to keep his income goal of $4,250 (in today's dollars) consistent)?