RETIREMENT PLANNER
VERSION 2 - Direct Entry
This detail version will cover all the financial complexity leading up to your retirement and beyond. Entry and results are all on the a single Excel form for easy reference between input and results.
INFLATION ALLOWANCE & ADDITIONAL RETIREMENT INCOME
Set inflation adjustment rates for your budgets and withdrawals from RRSP and Home (saving) accounts as well as government pension amounts and estimated yearly increased Basic Personal Exemption amount.
Enter any additional income you may have during your retirement such as from part-time work or investments. Select the "To Age". The planner will assume your income will start at the begining of your retirement and stop at the selected age.
HOME and TFSA
Your HOME and TFSA assets drawdowns are tied to the same 3 stages of your RRIF accounts. You have the option of drawing from one or all accounts to meet your income need. You also have the option of selling your house and re-purchasing to help finance your retirement by selecting Y (Yes) or N (No) from the dropdown list. If you select Yes, you will have the option to repurchae (a smaller home) by entering the house value or leave blank if you don't re-purchase. Income from selling your home will be deposited in a savings account where interest will be taxed and you can set the return on investment %. Enter the amount in combination with your RRIF accounts to meet your needs using the Net Monthly Shortfall amount to guide you.
Repeat for the 2nd and 3rd stage. Balance at end of stage and remaining asset at end of retirement are displayed.
NOTE: Your withdrawal for each stage must be made from one or all 3 income sources (RRIF, TFSA and HOME) to sufficiently clear the shortfall amount before moving onto the next stage withdrawal.
BUDGET TEMPLATES
There are four Budget templates available covering the four potential housing conditions that may occur during your retirement. They are HOME (house), RENT, CONDO and RESIDENCE (retirement home).
You should fill in the estimated budget amounts for all the applicable categories at present day $ value. The Planner will adjust the budget amounts based on the inflation rate you've set to the FUTURE value at your retirement age. If you've already calculated your monthly budget elsewhere, simply enter the overidding monthly amount at the top of each budget. You can also use the overriding feature to cut back in case you find that your assets do not meet your retirement planning..
The inflated amounts for the corresponding budget will be used to compare against your selected withdrawal amounts for the housing stages during your retirement.
FEDERAL AND PROVINCIAL TAX
Detail Federal and Provincial tax are calculated for each and every year of your retirement.based on the pension and withdrawal income you've set. These worksheets are available for view/information only. There is no user inputs required.
RETIREMENT PLANNER OVERVIEW
This above an overall view of your retirement planner, From here you will enter all the required personnal and finacial input and make the necessary income withdrawal amounts during various stages of retirement to meet your budgeted needs. It is quite complex as it covers all your financial transactions during your retirement period. Don't be overwhelmed by the vast amount of information and take the time to read the instructions contained in the Planner as well as the basic information below to fully understand the logic and financial mechanics involved. In addition, there are many "comments" attached to each entry to help explain and guide you to making the entry and/or selection. Simply hover your mouse over the red triangle to access the dropdown comments.
Also, note that you only enter cells/boxes that are "white" and select from the drop down list for cells that are "pink". All "blue" colored cells/boxes are generated automatically from your entry elsewhere.
ASSETS
This is an overview of your ASSETS Section and where you enter and track your RRSP, TFSA, RRIF and HOME accounts and set the withdrawal amounts to satisfy your financial needs during retirement. The balance of your liquid and total assets is shown on the right side for every stage, Amounts in blue are your total assets which include your house value.
PERSONAL INFORMATION
This is where you enter your personal information - name, current age, age at retirement and age at end of retirement and that of your spouse (leave blank and clear all spousal entries if you are single)
This information will be used to calculate your savings and retirement period as well as pro-rating all amounts (withdrawal, pension and tax) to the inflation you set to reflect as close as possible the actual amounts in the future when you retire.
GOV'T PENSIONS & TAX ADJUSTMENTS
Enter your estimated income while claiming QPP pension. This will be used to calculate your QPP supplemental amounts.
Set the age you plan to claim your QPP or CPP pension by selecting from the dropdown list, as well as your estimated pension amount if you are not expecting the receive the maximum amount. This wil be used to calculate the CCP/QPP amount you will receive.
Select the % of your CCP/QPP amounts you want to transfer to your RRSP account. Select 0% or lower than 100% if you have limited room.
You also have the option of transferring all excess amounts not transfewrred to RRSP acount rowards a tax-free savings account (TFSA) by selecting "Y" under Balance to TFSA.
Select the % of your RRIFwithdrawal and interest amount you wish to transfer to your spouse's income to equalize both your incomes and help reduce your tax implication. Use the net Federal income amount displayed to guide you. These incomes are for the retirement age you select in the Combined Average Monthly Income section.
RETIREMENT SAVINGS - RRSP, TFSA and Onr-Time Benefits
There are 3 RRSP accounts provided for you and your spouse to track your savings. Each account is given two stages to allow you to set different return rates reflecting your choice to go with a more aggressive portfolio followed by a more conservative porfolio during the last stages before your retirement. One of the RRSP account (RRSP-2) is a second RRSP account that is used to transfer any and all government pensions (QPP/CCP and OAS) you may claim while working. Your total present day asset is shown at right.
You are also able to set the age separating the 2 stages (starting age of your second stage) for you and your spouse as well as the annual contributions/deposits you plan on making for each stage. Based on the results to follow, you can come back and increase your saving contribution to meet your retirement needs. The total value of your savings at retirement age is shown at right.
In addition to the RRSP accounts, you are provided with a Tax-Free Savings Account (TFSA) which you can track. This account is also used to transfer any government pension amounts you may claim before your retirement that you canot transfer to your RRSP-2 account because you do not have the headroom. If you enter a percentage less than 100% in the Gov't Pension & Inflation Allowance Section to indicate that you cannot take the full amount in your RRSP account, and select "Y" under "Balance to TFSA", the difference with be transfered to your TFSA at an after-tax amount calculated based on the income level you've provided.
You also have two "One-Time Benefit" possibility to handle fixed one-time income during your retirement such as an inheritance or planned sell-off of investment assets. Simply enter the pre-tax amount and the age you will receive the funds.
RETIREMENT DRAWDOWN - RETIREMENT STAGE RRSP, RRIF, TFSA and HOME
This section covers your retirement asset "drawdown" period. Depending on your age at retirement, you will be drawing from your (retirement stage) RRSP until they are converted into RRIF (Registered Retirement Income Fund) accounts with minimum withdrawal requirements when you reach 71. Your HOME and TFSA assets if you have them will also be available for drawdown.
NOTE: The Stages during your DRAWDOWN period are all tied to your BUDGET which is set in your HOME Section. Before making any entry in this section, please go to your BUDGET Section and set the Stage 1 and Stage 2 end age. These 3 stages are defined by your housing condition and associated BUDGETS so you must set the ages that reflect your planned living condition before you can make any withdrawals.
COMBINED AVERAGE MONTHLY INCOME
This is only a snapshot of your retirement gross and net income with budget amount and surplus or shortfall dispplayed for a particular age during your retirement period. You select the age at the top from the dropdown list
You can also enter any additional company pension income amounts you expect to recieve. The amount will be inflated assuming the amount entered is at your retirement age.
BUDGET
This is where you can set your housing/budget condition for 3 separate stages that that will reflect your retirtirement budget needs. The stages are defined by housing type but doesn't necessarily mean it has to tied to your housing condition. If you choose to live in your house throughout your retirement, you can use the different templates to reflect your income needs for the 3 stages you can set.
By selectingthe budget for HOUSE, RENT,
CONDO, or RESIDENCE from the dropdown list you are assigning this budget to the defined stage.
AVERAGE MONTHLY INCOME BREAKDOWN
This summary section display your monthly income amounts from all your income sources, your income tax and net income amounts, your monthly budget and surplus/shortfall and re-invest amounts as well as your remaining asset for each and every year of your retirement.
Your Surplus/Shortfall amounts are are shown and referenced to the drawdown section to quide you on the amount you need to withdraw. A red amount indace a shortfall and black indicate surplus. Try to enter an withdrawal amount in each stage to eliminate all shortfall (red) without overdrawing even though this will be difficult. Leaving a small shortfall of less than $20 in any one year is not a problem as the intent of the Planner is only to shed some light on your overall finacial standing during retirement.
Overdrawing (surplus) amounts will be re-invested in your SAVINGS account as after tax amounts.
How long your funds will last into retirement will be indicated by the age at which your asset is gone. Use this as a guide to start saving more while you still can and save as early as you can by going back to your asset section and contributing more. If necessarym you may have to reduce your budget amount or delay your retirement accordingly.
RRIF - You can enter the return % as you did for your RRSP accounts so your assets can continue to be invested like your RRSP. The Planner will automatically calculate and withdraw the minimum amounts required by law, but you may need to make additional withdrawal amounts to meet your needs for each stage. Use the Shortfall indicator to guide you. Shortfall amounts are displayed in red for the corresponding stage must be corrected by entering an amount that will change the value to $0.
Note: The age separating your RRIF stages are locked in by what you set in your HOME Section.
Retirement Stage RRSP - This is an extension of your RRSP to cover the period from the start of your retirement until you reach 71 where your RRSP accounts will be converted into RRIF accounts. Unlike the pre-retirement stage accounts, you can withdraw but you cannot make any contribultions
You must enter the return % as you did for your pre-retirement stage RRSP accounts so your assets will continue to grow. Set the monthly withdrawal amounts that will meet your budget for this period using the Shortfall amount for guidance. Draw just enough to have the shortfal show $0, by entering approximately twice the net shorfall amount.
TFSA - Set the investment return rate and withdrawal amount in combination with your RRSP accounts to meet your needs.
NOTE: The cell you are entering the withdraw amount in will be highlighted RED if you overdraw the account i.e. the balance for the account is shown as $0. When this happens, only the available funds will be withdrawn and the amount you entered will be ignored. However, it is best to reduce the withdraw amount a little at a time to zero in on the exact amount at which the account shows $0 and the highlight is removed so the displayed information is accurate.
Errors:
Beacause the Planner allows you to set many stages to reflect your savings strategy and income needs, the age you set that are tied to these stages must be set in a logical sequence. With the incorporated dropdown list, it is not possible to enter an out-of-sequence or illogical age. However, if you change your retirement age after you've selected all the subsequent ages, it is possible that the new age you select will result in an inconsistant sequence. When this happens, the Planner may fail showing #N/A, and/or the cells for certain age selection wil be highlighted RED. Simply re-select your age entry for all highlighted cells from the revised dropdown list and the error will be corrected.
ERRORS AND WARNINGS
Warnings:
Income withdrawal cells will be highlighted RED to indicate that you've exceeded your available funds . The amount you've entered will be ignored and the maximum available amount will be assumed but it's is better to reduce the amount until the highlight goes away so your Planner can show the accurate withdrawal information.
Clarifications:
Most cells are taged with dropdown notes to help you understand what it is you are entering and/or what the information represents. Simply hover over the red markings or corners of the cell. If there is a message, it will be displayed.
