How much do they need p.a. before tax at retirement

Reference no: EM133269792

Question - Asrita and Sunil, both aged 53, plan to retire in ten years. They have no company pension plans so they will save for retirement using only their RRSPs. They estimate they will need $85,000 p.a. aftertax for both. They expect to live to age 90. Their combined RRSPs are valued at 245,000 and is earning a 6.5% real rate of return. Together, they expect to be able to contribute $12,000 every year. Asrita and Sunil have lived in Canada all their lives and will qualify for the maximum OAS of $700 per month at age 65. They have also both been contributing to CPP since they started working. Both will qualify for the maximum CPP per month because of the level of their income and years of contribution into CPP. They anticipate they will each receive $1,400 at retirement.

Assumptions -

Rate of Return in retirement 6%

Average Tax Rate (25%)

Inflation 2 %

Required - How much do they need p.a. before tax at retirement?

Reference no: EM133269792

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