1. With regard to Brad’s revised retirement plans:

a. How much will he have in 30 years if he takes full advantage of his employer’s definedcontribution pension plan and invests $300 per month at an annual interest rate of 8 percent, compounded monthly? Recall that his employer will match his contribution.

b. How much will he have to save per month at an annual interest rate of 8 percent, compounded monthly, to reach his $1 million goal in 20 years? In 30 years?

c. What impact could retiring 10 years earlier have on Brad’s current standard of living? In other words, compare Brad’s monthly income if he retires in 20 years to his monthly income if he retires in 30 years. Brad expects to live until age 90. Assume that the annual interest rate remains at 8 percent, compounded monthly. 

2. Will Brad meet his $1.5 million goal if he takes full advantage of his employer’s defined-contribution pension plan and retires in 30 years?

3. Assuming that Brad participates in the defined-contribution pension plan, what will his pension adjustment be? How will this affect his RRSP contribution room for the following year?

4. To reach his goal of $1.5 million in savings by the time he retires in 30 years, could Brad save any additional funds inside an RRSP, tax-free savings account (TFSA), or other type of retirement account? Explain.

5. If Brad really wishes to provide for his nephews’ post-secondary education, how can a will help him to achieve that goal? What else might Brad consider to assure his nephews’ post-secondary education?

6. Not taking into account his nephews’ post-secondary education needs, should Brad consider writing a will? Explain.

Use the worksheets available on MyLab Finance to complete this case.

Brad tells you that he has revised his retirement plans. He thinks it may be more realistic to retire in 30 years as opposed to the original 20 years he had mentioned earlier. His goal is to save $1.5 million by that time. Brad’s employer offers a defined-contribution pension plan; however, Brad is not taking advantage of this plan. Brad’s employer will match pension plan contributions up to $300 per month.

Factoring in the employer match, Brad could have a possible total annual pension contribution of $7200.

Brad is wondering if he would still be able to contribute to an RRSP and/or a TFSA if he eventually starts contributing to the defined-contribution pension plan.

Brad also unveils his plans to provide for the post-secondary education of his two nephews in the event of his death. He does not have a will and wonders if one is necessary.