Anand & Priya both aged 55 are in exceptionally good health and have a lot of...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Anand & Priya both aged 55 are in exceptionally good health and have a lot of time as their children are away at university. Anand owns a café in Toronto and Priya was self-employed as a software engineer. Anand earns a gross income of $45000 and $31500 net income after taxes. Priya has a gross income of $135000 and a net income of $97200 after taxes. Looking back they realise how hard they worked to come thus far. They thoroughly loved raising their two children and have always made financially sound decisions. Now they look forward to their retirement years and hope to retire at 65. They have been saving regularly and investing wisely over the years. They keep a close eye on their investments and adjust their strategies whenever necessary. They have no credit card balances and bought their car with the cash they had. They use credit cards for convenience only. Both their children have work-study programs at the university and so have their education covered. The couple wishes to purchase a smaller home in Niagara Falls area. Current financial Situation Monthly expenses Mortgage Property taxes Homeowners insurance Chequing account Savings account Emergency fund savings account House (Mortgage value $63000) $875000 TFSA RRSP Non registered investments (stocks & bonds) Life insurance cash value Car : Anand Car : Priya $8500 $53000 $55000 $1542.77 $400 $200 $300 $1000 TFSA contribution $90000 $400000 RRSP contributions $300000 $125000 $12500 $16000 Utilities Food Gas /Maintenance Entertainment $350 $600 $485 $400 $475 Life insurance Note: Assume the portfolio of assets in the various investments earns an average of 59% APR compounded morthly for investment accounts and 196 APR compounded monthly for the savings/emergency accounts. Ignore tazes & inflation a. Looking over Anand's & Priya's assets, which ones could be valuable to them for income as retirement approaches? (2 mark) b. What government pensions will they be entitled to at retirement? What is the earliest they can collect these government pensions and how would taking it early impact the pension? (3 marks) c. Assuming they continue to contribute the above amounts to the RRSP's and TFSA's, how much will they have in assets to use for retirement at age 65 (include the non-registered investments as well in your calculations)? (5 marks) d. How much can Anand & Priya withdraw each month and still leave their nest egg intact? (1 mark) e. How much can they withdraw each month that will reduce their nest egg to zero assuming they live until they are 90 years old? (2 marks) f. What are some issues that could come in the way of their retirement plans? (2 mark) Anand & Priya both aged 55 are in exceptionally good health and have a lot of time as their children are away at university. Anand owns a café in Toronto and Priya was self-employed as a software engineer. Anand earns a gross income of $45000 and $31500 net income after taxes. Priya has a gross income of $135000 and a net income of $97200 after taxes. Looking back they realise how hard they worked to come thus far. They thoroughly loved raising their two children and have always made financially sound decisions. Now they look forward to their retirement years and hope to retire at 65. They have been saving regularly and investing wisely over the years. They keep a close eye on their investments and adjust their strategies whenever necessary. They have no credit card balances and bought their car with the cash they had. They use credit cards for convenience only. Both their children have work-study programs at the university and so have their education covered. The couple wishes to purchase a smaller home in Niagara Falls area. Current financial Situation Monthly expenses Mortgage Property taxes Homeowners insurance Chequing account Savings account Emergency fund savings account House (Mortgage value $63000) $875000 TFSA RRSP Non registered investments (stocks & bonds) Life insurance cash value Car : Anand Car : Priya $8500 $53000 $55000 $1542.77 $400 $200 $300 $1000 TFSA contribution $90000 $400000 RRSP contributions $300000 $125000 $12500 $16000 Utilities Food Gas /Maintenance Entertainment $350 $600 $485 $400 $475 Life insurance Note: Assume the portfolio of assets in the various investments earns an average of 59% APR compounded morthly for investment accounts and 196 APR compounded monthly for the savings/emergency accounts. Ignore tazes & inflation a. Looking over Anand's & Priya's assets, which ones could be valuable to them for income as retirement approaches? (2 mark) b. What government pensions will they be entitled to at retirement? What is the earliest they can collect these government pensions and how would taking it early impact the pension? (3 marks) c. Assuming they continue to contribute the above amounts to the RRSP's and TFSA's, how much will they have in assets to use for retirement at age 65 (include the non-registered investments as well in your calculations)? (5 marks) d. How much can Anand & Priya withdraw each month and still leave their nest egg intact? (1 mark) e. How much can they withdraw each month that will reduce their nest egg to zero assuming they live until they are 90 years old? (2 marks) f. What are some issues that could come in the way of their retirement plans? (2 mark)
Expert Answer:
Answer rating: 100% (QA)
a The following items are valuable to them as retirement approaches 1st priority Cash liquidity a chequing account8500 savings account53000 emergency fund savings account55000 TFSA90000 plus monthly c... View the full answer
Related Book For
Operations Management Creating Value Along the Supply Chain
ISBN: 978-1118301173
1st Canadian Edition
Authors: Roberta S. Russell, Bernard W. Taylor, Ignacio Castillo, Navneet Vidyarthi
Posted Date:
Students also viewed these economics questions
-
University students always have a lot of work to do, but this semester, Katie Sirinyan is overwhelmed. The table below lists the assignments she faces, the estimated completion times (in days), and...
-
Corporations have a lot of influence over the economy, the community, and people. The traditional view of corporate responsibility is that a corporation has no additional social responsibility beyond...
-
If you have a lot of debt such as car loan, student loan, line of credit, and credit card balances which you carry from month to month, which will be the most relevant in determining how much...
-
Summarize the extract given below? When Paul Farmer graduated from Duke University at 22, he was unsure whether he wanted to be an anthropologist or a doctor. So he went to Haiti. As a student, Paul...
-
Summarize the results of the F and t tests for the output of Exercise 12.51. In exercise . regress Sale Size Parking Income Source df MS Number of Obs 1E Model | 27.1296056 3 9.04320188 Prob >F...
-
What proportion of families are hypertensive? (Assume that the hypertensive status of different members of a family are independent random variables.) Hypertension People are classified as...
-
A researcher argues that ZIP codes are quantitative data because they measure location, with low numbers in the east and high numbers in the west. Is she correct? Why or why not?
-
Quick Test Laboratories evaluates the reaction of materials to extreme increases in temperature. Much of the companys early growth was attributable to government contracts, but recent growth has come...
-
Gary's TV had the following accounts and amounts in its financial statements on December 31, 2022. Assume that all balance sheet items reflect account balances at December 31, 2022, and that all...
-
Comprehensive Problem 1 - Part 1: Taxpayer information, Form 1040, Schedules 1, 2, 3 and 4, Schedule A, and Schedule B. Noah and Joan Arc's Tax Return Note: This problem is divided into three parts....
-
Suppose SCR (S is a proper subset of R) is bounded above and nonempty. If sup S is not an element of S then use a direct argument using the "approximation of the sup" to show that S is infinite....
-
What is a lagged dependent variable? Why do we use lagged dependent variables in a regression?
-
What is a nonlinear regression model? Why do we sometimes choose to estimate a nonlinear model?
-
What assumptions concerning the slope coefficient b must we make when we use dummy variables in a regression?
-
When a 5-month moving average is found for a time series, how many months do not have averages associated with them (a) at the beginning of the time series and (b) at the end of the time series?
-
Explain how the number of degrees of freedom available for estimating 2 of the error term is related to the number of variables in the regression.
-
What function does pressing the Tab key have when entering a command in 10 It aborts the current command and returns to configuration mode. It exits configuration mode and returns to user EXEC mode....
-
If a and b are positive numbers, find the maximum value of f ( x ) = x a (9 x ) b on the interval 0 x 9.
-
Brandon University is a small university that would like to increase revenues by expanding its student base and building ties with businesses in the surrounding area. To do so, it is considering...
-
East Coast Airlines operates a hub at the Halifax International Airport. During the summer, the airline schedules seven flights daily from Halifax to Toronto and 10 flights daily from Toronto to...
-
Blake is an intern in the Department of Performing Arts (DPA) at Local University. One of his duties is to schedule end-of-term recitals for the department?s graduating class and to create and...
-
Using two CST elements, solve the simple shear problem depicted in the figure and determine whether the CST elements can represent the simple shear condition accurately or not. Material properties...
-
A heat conduction problem is modeled using four onedimensional heat conduction elements, as shown in figure 4.6. All elements are of the same length, \(L=1 \mathrm{~m}\), cross sectional area of...
-
Consider a network of onedimensional heat conduction elements as shown in figure 4.7. The temperature at node 1 is fixed and heat inputs at other nodes are prescribed. Properties of the elements are...
Study smarter with the SolutionInn App