It is the end of December 2022, when Olga and Michael DObiski , age 53 and 56 respectively, come to you for some help with their financial planning. Although they have always been financially conservative and careful with their money, they realized that they are now in their " late 50's" and decide that they should figure out where they stand. Retirement is on the horizon, and they are really looking forward to "slowing down" and enjoying life. They want to retire tomorrow but realize that may not be realistic. However, they want to check to see just how close retirement can be.

As they approach their 60's, they look forward optimistically to the future. As they look back, Michael and Olga are pleased with the financial position they are in. Michael, a top executive in a mid-sized IT firm, is financially savvy but also likes to enjoy life now. Olga is highly conservative by nature. Put the two of them together and they balance each other out well. They have been married for over 25 years, shared many happy times together and are surrounded an amazing family and community of friends.

Olga and Michael have two adult children, Jessica (Jess for short) , age 24 and Maya, age 22. Jess is in her 4^th year of her chiropractor program in Ottawa, Ontario . Like most students, it took Jess a couple of years to find her passion but she is loving her program and is excited to be a "Doctor" in the future. She will have one more year of school, with tuition of $13,000 per year. Maya is completing a Bachelor of science at a local university (tuition of $9,000 per year) . Although most of her degree was completed through online learning, she is happy to be commuting to campus, post covid-19, for this final year. Both children will graduate next at the end of 2023. This will be a happy time for the DObiski Family.

Current Financial Position:

Michael is a top executive at a mid-sized Healthcare company (Healthco Ltd.), a privately held corporation, in Stoney Creek, Ontario. He has worked at this company for 5 years and has endured many changes in the corporate structure and management since he started. A private corporation, Healthco Ltd. has grown significantly in the past few years due to takeovers and mergers. Michael is well regarded in his role at Healthco Ltd as Chief Financial Officer (CFO). As an incentive, Michael was given share ownership in the company one year ago. Although the valuation of the private shares is difficult, the were valued to be worth $8,000 at that time. Michael does not know the exact valuation of these shares but expects that they have appreciated by 100% since he received them at the beginning of 2022.

Michael currently earns a gross salary of $189,000. Depending on his performance and the performance of Healthco Ltd overall, he usually earns a bonus of approximately 20%. Although it has been higher in one of the past years, that is the amount that he "expects" to receive. Any additional amount would be considered "a true bonus" in his eyes. Healthco provides him with life insurance at 2 times his salary and he purchase group LTD which replaces 66% of earnings to age 65 through Healthco. Michael pays for his own LTD, income tax, CPP and EI through payroll deduction at source. Michael receives a comprehensive dental and health insurance provided by Healthco Ltd. After all these deductions, his take home pay is $9,943 per month. His bonus of 25% is received in a separate payment.

Healthco Ltd is a leading employer. Given the competition in today's labour market, Michael anticipates that his salary will increase with inflation, even in these times of high inflation.

Olga is a teacher at a local private arts school. Her current salary is $108,000. She has been employed in the school board for 15 years only since she spent her younger years pursuing a career in artistic ventures. Eventually, Olga opted for a stable job and enjoys her time with the children at school. She participated in the DBPP which provides her a benefit of 2% x average best-five years earnings x years of service. She pays for Long term disability provided by her school board through payroll deduction.She is provided with comprehensive dental and health insurance, and group life insurance at one times her salary. She feels like there are quite a few deductions off her pay - her take home pay is $5,933 per month. Although there are opportunities for upward mobility, Olga has her eye on retirement and as such, she just wants to make the most of her current role. As such, she does not want you to assume any promotions or real increase in salary. As far as the financial plan goes, she prefers that you just assume her salary will remain constant. Any salary increases or promotions, beyond that, will be "gravy" or a "bonus" for her.

Assets

The Family Home

Olga and Michael own a four-bedroom family home in Scarborough which they Purchased in 2004 for $569,000. Unfortunately, the house was flooded in 2013 and they had to complete many renovations. It was an older home and needed to be redone top to bottom. This put them in a lot of debt which they have been diligent in paying down. They anticipate that the house has appreciated substantially in value based upon the housing Market in their area and two waves of renovations. Another house, similar to theirs, recently sold on their street for $1,800,000. Olga and Michael have high pride of ownership and are continually doing renovations. As such, they believe that their home is worth approximately $1,750.000. They still have two mortgages on the property. The first mortgage has a balance of $87,759 at a rate of 2.79% and the second mortgage has a balance of $70,655 at a rate of 2.79%. They are paying these mortgages down aggressively with respective biweekly payments of $1,105 and $1,020. Based upon these aggressive payments, the remaining amortization period for both of these loans is close to 3 years. They cannot wait to be mortgage free as it will free-up cash flow for them.

They also have a Line of credit available to them as part of their HELOC which allows them to borrow up to $800,000 in total. (That was based upon FMV at time of renovations back in 2013 when the property was last appraised). The mortgages are 5-year fixed rate loans. Their mortgages are both coming due in June 2023, and they are worried what will happen/what will transpire when they renew as they will be exposed to the new/higher interest rates. They would like your advice on that.

Other Assets:

Michael Is the proud owner of a Dodge Minivan. Michael leased this vehicle originally but since his mileage was low on this car due to covid-19 (and working from home), he bought the car for its buyout a couple years ago. The car is worth $20,000 approximately. Olga drives a 2020 Honda Civic Sport at $26,750 two years ago. They have two years remaining on the lease at $600 per month.They plan to buy out that car at that time for $24,200. They plan to use their TFSA for this purchase so it will not impact their annual cash flow.

They estimate that their personal assets (hot tub, furniture/TVs/computers) have a value of $30,000. This does not include Olga's jewellery. She owns special jewellery which has a FMV of $ 15,000.

Investment Assets: (all values are as of December 31, 2022)

At the beginning of this year, they had $8,000 in their cash accounts. This was split evenly between their chequing and savings account. Olga and Michael believe that they are moderate risk investors overall. Although they were comfortable with higher risk in the past, this past year has made them quite nervous. It was the first time that they saw REAL fluctuations in their investments.... due to volatility on a day-to-day basis. In the past they did not contribute to a TFSA to the maximum.Prior to this year, Michael and Olga have each contributed $15,000 to their TFSA and with growth, they are valued at $19,500 and $18,800 respectively at the end of 2022. Their TFSA are invested in various ETFs. Many of them are equity ETFs and one is a bond ETF.

Michael and Olga are diligent in saving for their retirement. They have done so consistently throughout the years. Michael currently has $261,000 in one RRSP and $68,000 in locked in RRSPs from previous employers. He also has $480,000 in another RRSP and $40,000 in a Defined contribution pension plan with his current employer. He gives to the DCPP at work. He also contributes $15,600 annually to the RRSP. Olga contributes to a RRSP approximately $5,000 per year because she gives so much on each paycheque (approx. 10% of gross earnings) on each paycheque. Her RRSP is currently valued at $269,856.She is invested in equity ETFs and some balanced ETFs. She is shocked each month about the investment management fees that she pays for her investment accounts. The investment manager does not check in with her often and follows a passive approach but yet she and Michael pay 1.25% per year for assets under management.

Michael has $70,575 of unused RRSP contribution room and Olga has $146,757. They have designated the children as the successor annuitant on their TFSAs. They have named each other as named beneficiaries on their RRSP. Michael is wondering if he should give more to his RRSP at this point since they seem to have some cash available. He is in his high-income years and would like to take advantage of the tax deduction, but, only if more contributions are required to meet their retirement goals.

Michael has a non-registered account, in his name only, which contains his shares from a predecessor employment. These are publicly traded shares of a company called USC Ltd. The FMV of this account is $48,200 with an ACB equal to $18,800.The ACB is so low because USC matched the contribution that Michael made to their employee stock purchase plan.

Michael and Olga basically paid for the university tuition and related expenses for both their children. This included the tuition amounts listed above plus rent for Jess when she is away. This averages approximately $650/month. Looking ahead to 2023, they are happy that they only have one full year and Jess's accommodation lease will end in April 2024. This seems like a big win for them. They wonder how they can best use the cash flow that they free up once all of the education expenses have ended. Although Jess and Maya will live at home, it is expected that they will get full time employment and be relatively self sufficient. Michael and Olga hope that they will then take responsibility for their cell phone bills $60/child per month and their portion of the car insurance ($2,000) come 2024.

Liabilities:

As mentioned above, they have mortgage balances outstanding.. They also have a secured line of credit, charging Prime plus 3%.The details of the balance outstanding are above. It really bothers Michael that they still have a mortgage. However, since it is at a relatively good interest rate, he wonders if it is better to invest excess cash in a RRSP or TFSA. He would like your advice on that.

Olga does not like to use credit cards but does use them on a rare occasion. When she uses them, she pays them off in full.

Expenses:

Before they came to see you, Olga and Michael tried to figure out exactly where they were spending their money. They have tried to help you by putting it into categories for you.

Housing:Property taxes are $6,936 per year. The utilities for the house are $12,900 per year (their hot tub uses a lot of energy).House insurance is annual fee of $3,196. Telephone, cell and internet is $3,000 per year. Cleaning assistance is $2,880 and repairs are $3,320 and we cannot forget Netflix at $18/month.

Automobiles: The costs of the automobile loan are included above. For the four of them, their auto insurance is quite high. It is $385 per month. Luckily their gas consumption has decreased, post-covid, but with higher gas prices, they hardly notice. They estimate $700 month on gas. They estimate that maintenance on the cars will be approx. $1800 per year. They are newer vehicles so they are quite certain that nothing major should go wrong in the next few years.

Household:Groceries are $15,000 per year. Fast food and restaurants are about $3,380 as dining out is their one date night. Home entertainment is usually about $300/month, and this includes the cost of beer, wine and food for guests. The DObiskis love to entertain. Clothes are $6,200 per year, mostly now for Olga and Michael. Every now and then Olga likes to spoil her children and buy them some new clothes and will spend approx. $2,000 per year for each of them.It adds up so quickly. Charitable donations are $1,500. Personal grooming is about $2,000 per year. Other miscellaneous house expenses are $3,000 per year as Olga is always decorating. Their family dog, Toby, also brings them great joy but costs about $2,000 per year.There seems to be an amount of $6,000 that they cannot really track. These are cash withdrawals from their account, but they don't know what they spend it on. This seems like a large black hold to Olga and Michael. It stresses them out.

Fun and Leisure:

Michael and Olga usually take the family away with their family in the summer. This usually costs approximately $2,000. They also like to travel on an adult only trip with their friends. This is approximately $6,000. It is great to spend a week in the fun and sun.Michael and Olga love to golf and they will also incorporate that into their vacations. But its not cheap. Although they seem like small little excursions, they do add up.... a couple weekends away could result in expenses of $4,000.

Michael and Olga loves to play golf. They are members of the local golf club. With the golf dues and the food and drink they must purchase; they spend approximately $10,500 each on golf.

Other: Olga calculates that, due to big family and many godchildren, she spends about $5,000 on Christmas and birthdays throughout the year. They think this will remain consistent as the children of their friends start to get engaged and married.

Risk Management:

In her cash management, Olga tries to anticipate "emergencies" for which she may need cash. For this reason, she likes to keep a cash balance to cover emergencies.

As mentioned above, Michael and Olga have group life insurance at his place of employment. They wonder if that is enough. They also have a term 20 life insurance policy, for $500,000, that they pay for separately.They pay $224 per month. It will come due in 5 years. Michael also has a private own occupation LTD policy that he pays $124 per month. It will pay him $2,800 per month if disabled. It has a 90-day waiting period.

They are not sure if they need any more insurance but, At this age, they cannot fathom purchasing life insurance as it will expire when they turn 65. If Michael should pass away, they will replace 60% of his salary until age 65. If Olga should pass away, they do not know if they would need to replace 40% of her salary.They ask you about their insurance needs.

Michael and Olga have named each other as beneficiary on the life insurance policy, with the estate as the contingent beneficiary. They set the estate as the contingent beneficiary years ago. They wonder if they should be changing that now that kids are older. They worry that, if they should both pass away concurrently, that the kids would get a huge sum of money and they may not be able to manage it yet. Are there any provisions that can help with this issue? They also worry about Maya. She seems to like the best things in life, and they worry that, if he should inherit a large sum of money, that she may spend it foolishly. She loves to shop for clothes and shoes!!!!! They wonder how they can control this if they should pass away.

Michael has disability insurance at work that will cover 65% of his salary If disabled. Olga does not have any additional coverage at work. They are unsure if they have too much or too little insurance. Since they have so many friends who have died recently, they would rather be over-insured than under-insured. They also have some friends who have been diagnosed with serious diseases such as cancer and one even had a heart attack. They wonder about the emotional and financial impact this could have on them

In general, they are both in good health. Olga just recovered from a breast cancer scare but all is good. She is on cancer watch now. Her family history indicates that she may be prone to kidney disease or thyroid disease. Michael is in good health with much type 1 diabetes in his family lineage. Michael's parents lived well into their 90s so that also brings the concerns that he needs to ensure he has enough saved for a lengthy retirement.

Retirement Planning:

Up until now, Michael and Olga have just saved whatever they could in their RRSP. It was not really a strategy but more so, just try to do what they can. Although they knew that they could be saving more, with all their expenses along the way, they did the best that they could. They usually contributed to a RRSP to save taxes as opposed to really thinking about retirement.

Michael is tired of work. It has been too busy for too long. He wonders when he can slow down and perhaps, assume a job that would pay him 60% of what he earns now.... of course, he would like to work 60% of the time. He asks you about that. He hopes that he can cut down work next year (2023). If he did, he thinks he could work for another 5 years.

Olga loves her job. As of today, she thinks she can work until she can retire without a reduction in her pension. She asks you when that will be and how much her pension entitlement will be (based upon today's salary).

They tried to live a balanced life.... enjoy life and save along the way. But now that some of their expenses have been eliminated and they know that many other child related expenses will be disappearing in the next year, they wonder if they should be giving more to their RRSP.The other concern that they have is that they are not sure how much they will need in retirement but do know this:

• They hope that Jess and Maya will be totally self sufficient one year after they graduate. They expect that they may live at home but will carry/pay for their own personal expenses like clothing, cell phone and car insurance.
• They expect that they can rely on one car in retirement. They will keep the larger car for golfing trips. They do expect that they will save $300 per month on gas and maintenance due to lower mileage.
• They would like to rent a condo in Florida for part of a winter (+6,000/year).
• They will keep their current golf membership. In the latter years of retirement (last 10 years), they will not golf or travel to Florida but hear that they will have to re-allocate this amount to go towards increased medical expenses and supplements. They will not have coverage so may purchase a medical insurance plan or self insure. They also would like to know the tax implications of this.
• Travel - This will require an additional $10,000 of travel expense. Per year
• Housing - They hope to live in their current community. Once they get older, they will try to downsize from their four-bedroom two storey house to their a bungalow in the same neighbourhood.They may realize an additional $150,000 a the most on this transaction.

Michael and Olga hope that you can help them determine how much they will need in retirement. They know the rule of thumb is 70% of their pre-retirement pay. They are not sure if that they will need that much, but when they look at the numbers, it seems to be such a low-income number in retirement. They want you to help them determine how much they may need.Please state your assumptions.

They hope that you can help them determine what they may need in retirement (and where it will come from). They have heard that one can take CPP early or later and would like your advice on this based upon their projected retirement dates. Also, please indicate how returning to work part-time could impact his CPP decision.

Assume max CPP pension benefit (todays dollars) is $15,000 and max OAS pension benefit (today's dollars) is $7,500. (Both Olga and Michael have always earned above the YMPE).

Taxation:

Michael and Olga are not sophisticated with taxation. They file their returns on a regular basis and usually get a small refund.However, they are worried that they have missed some things. They hope that you will review their tax returns for past few years but, in the meantime, want you to think of issues that they may be facing. IF they give to a RRSP, does it matter which one of them contributes to maximize tax efficiency now and in retirement.

Estate Planning:

Michael and Olga created wills and power of attorney shortly after the children were born. They have not been updated since that time. In the will, their assets will go to each other first and then pass equally to the children. They start to wonder if this is the best structure.They had previously named guardians in the will. Do they need them anymore? They previously had a trustee to hold funds for the children ....do they need that role anymore?

They are wondering if their affairs are structured for efficient distribution to each other, in the event of a sudden death.

They wonder if there are any was that they can minimize the taxes/fees payable upon the death. They wonder if there are any was that they can minimize the taxes/fees payable upon the death. They would like to leave $5,000 to each of their godchildren. They have 6 God children between the two of them.

They hear that people are living longer these days.... but they figure that Michael will pass away earlier than Olga. Olga has been told that she will live well into her 90's. That said, Olga does not like to live alone so keep the expenses the same. If she is alone, she may sell her house but then use the funds to pay for a fancy retirement home where she will be surrounded by her friends.

They thank you for your attention....they are not sure if they missed anything but, if so, they hope that you can just make the best assumptions possible based upon what you see with other clients.

You need to create "Statement of Net Worth" and " Cash Flow Statements" for Olga and Michael Dobiski