$[4$:$05$ p$.$m$.,2025-01-29]$ Shruti: Gary and Nancy will live for another $26$ years inclusive of this year.

$*$ Unless otherwise stated, Gary and Nancy are each assumed to be in a $36\%$ combined marginal tax bracket for the remainder of their lives

Inflation is expected to be an annual rate of $2\mathrm{.}5\%.$

Investment returns for all investments are assumed to be $7\%.$

The OAS clawback threshold for this year is $$77,580.$

The maximum monthly OAS benefit from this year forward will remain fixed at $$601\mathrm{.}45$

The maximum monthly CPP benefit from this year forward will remain fixed at $$1,154\mathrm{.}58.$

$*$ The maximum monthly CPP benefit $18$ months ago was $$1,134\mathrm{.}17$

YMPE: $3$ years ago: $$54,900$; $2$ years ago: $$55,300$; last year: $$55,900$

The net income threshold for enhanced Registered Education Savings Plan CESG payments will remain fixed at $$91,831$ from this year forward.

If Gary and Nancy apply for their respective OAS benefits at the earliest possible age, what statement$($s$)$ is correct? $($For purposes of this question, ignore issues related to the clawback.$)$

i$.$ Gary should apply for OAS benefits under the old rules; Nancy should apply for OAS benefits under the new rules.

ii$.$ Since Nancy has only $26$ years of employment after age $18,$ she will be eligible for only $65\%$ of the maximum monthly OAS benefit.

iii. Based on his residency in Canada, the maximum monthly OAS benefit Gary can receive is approximately $80\%$ of the full benefit.

iv$.$ Both Gary and Nancy should apply for OAS benefits under the new rules..

v$.$ Gary should apply for OAS benefits under the old rules; Nancy can apply for OAS benefits under either the new rules or the old rules.

a$)$ i only

b$)$ ii and iv

c$)$ i$,$ ii and iii

d$)$ iii and v

$[4$:$07$ p$.$m$.,2025-01-29]$ Shruti: Retirement Objectives

Gary and Nancy intend to lead a modest lifestyle during their retirement years. That being said, within the next five years, they will have one significant expense: they want to take a round$-$the$-$ world trip. They estimate they will have to withdraw $$50,000$ from their savings to fund this trip.

Estate Objectives

Gary wants to leave a before$-$tax amount of $$25,000,$ in current dollars, in his RRIF as a charitable bequest to his church.

A major assumption in Gary and Nancy's retirement plan is that real estate values will continue to rise. They are counting on their principal residence having a market value of $$2\mathrm{.}5$ million at the time of their deaths. The property was purchased by Gary during his first marriage so$,$ ultimately, he would like to see the house passed on to Charlene and his grandchild.

Assumptions

Gary and Nancy will live for another $26$ years inclusive of this year.

Unless otherwise stated, Gary and Nancy are each assumed to be in a $36\%$ combined marginal tax bracket for the remainder of their lives.

Inflation is expected to be an annual rate of $2\mathrm{.}5\%.$

Investment returns for all investments are assumed to be $7\%.$

The OAS clawback threshold for this year is $$77,580.$

The maximum monthly OAS benefit from this year forward will remain fixed at $$601\mathrm{.}45$

The maximum monthly CPP benefit from this year forward will remain fixed at $$1,154\mathrm{.}58.$

The maximum monthly CPP benefit $18$ months ago was $$1,134\mathrm{.}17$

$$YMPE: $3$ years ago: $$54,900$; $2$ years ago: $$55,300$; last year: $$55,900$

The net income threshold for enhanced Registered Education Savings Plan CESG payments will remain fixed at $$91,831$ from this year forward.

What statement$($s$)$ is $($are$)$ true with regards to Gary's LIF?

$1.$ If Gary were to die at age $78,$ Nancy could transfer the remaining assets in the LIF as a designated benefit to an individual RRSP under which she is the annuitant. This transaction would not incur a tax liability.

II$.$ At age $80,$ Gary must convert the assets in his LIF to a joint and last survivor life annuity. iii. If Gary were to die at age $83,$ the annuity payments made to Nancy could be reduced by as

much as $40\%$

iv$.$ In five years, Gary could withdraw all of the assets in his LIF as a single lump sum to help fund the couple's round$-$the$-$world trip.

v$.$ Only the portion of Gary's LIF payments that represent an excess amount is subject to taxation each year.

a$)$ i$,$ iii and iv

b$)$ li and iii