Cathy, aged 50, earns an annual salary of $97,500. Cathy expects raises of 2% each year from
Fantastic news! We've Found the answer you've been seeking!
Question:
Cathy, aged 50, earns an annual salary of $97,500. Cathy expects raises of 2% each year from now to retirement.
Cathy plans to retire in 15 years when she will be 65. She has $177,000 now saved for retirement. Cathy plans to save 8% of her annual salary from now to retirement. She estimates that she will receive $21,000 (real dollars) per year in CPP and OAS at the time of retirement. She will receive a company pension of $18,000, in real dollars, per year. She wants to spend $70,000 real dollars per year from the first year of retirement until age 90.
The nominal rate of interest is 6.25% p.a. Inflation is 3% p.a. Ignore taxes in this question.
Required:
- How much money will Cathy need at age 65 to achieve her spending objective? Assume Cathy will withdraw the funds at the beginning of the year.
- How much will Cathy have saved at age 65? Assume Cathy will save at the end of the year.
- Will Cathy achieve her retirement goal?
- Cathy contributes to both her TFSA and RRSP accounts for retirement. In retirement, what should Cathy consider when withdrawing amounts from these accounts?
Related Book For
Posted Date: