James is 45 years old. He is planning on retiring at age 65 and he is...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
James is 45 years old. He is planning on retiring at age 65 and he is expecting that he will die at age 95. He has been saving for retirement and currently has $250,000 in savings that is earning 6% per annum. He is adding $8,000 to his RRSP each year. James believes that he will need $42,000 (today's dollars) after tax in retirement to meet his expenses. This is in addition to his CPP and OAS. Assume that inflation is 2% and his ATR in retirement will be 25%. What is the focal point? (1 mark) How much does James need when he retires? (5 marks) Will James have enough money to retire with his desired income? (2 marks) What two recommendations would you give to James? Explain the benefits and drawbacks? (4 marks) James is 45 years old. He is planning on retiring at age 65 and he is expecting that he will die at age 95. He has been saving for retirement and currently has $250,000 in savings that is earning 6% per annum. He is adding $8,000 to his RRSP each year. James believes that he will need $42,000 (today's dollars) after tax in retirement to meet his expenses. This is in addition to his CPP and OAS. Assume that inflation is 2% and his ATR in retirement will be 25%. What is the focal point? (1 mark) How much does James need when he retires? (5 marks) Will James have enough money to retire with his desired income? (2 marks) What two recommendations would you give to James? Explain the benefits and drawbacks? (4 marks)
Expert Answer:
Answer rating: 100% (QA)
The focal point in this scenario is determining whether James will have enough money to retire with his desired income To calculate how much James needs when he retires we need to consider several fac... View the full answer
Related Book For
Personal Finance Turning Money into Wealth
ISBN: 978-0134730363
8th edition
Authors: Arthur J. Keown
Posted Date:
Students also viewed these finance questions
-
Fergus and FelicityVine live in the North East of England. They own a house valued around 390,000 and this is owned as a beneficial joint tenancy. They have been married for 20 years and have no...
-
You have completed your first meeting with Harper and Riley Evans. You are confident that you now have most of the information you will need to prepare a comprehensive financial plan for them. Beyond...
-
You have an appointment with Keval and Priya Singh. They would like your advice on their current financial situation. Keval is 63 years old, he is very ill, and he is currently on disability. Priya...
-
Under a plan of complete liquidation, Coast Corporation distributes land with a $300,000 adjusted basis and a $400,000 FMV to William, a 25% shareholder. William has a $200,000 basis in his Coast...
-
Jerry never imagined hed be sitting there in Washington being grilled mercilessly by a panel of congressmen. But a young government auditor picked up on his scheme last year. His company produced...
-
Think of the job you currently do, or one that you have done recently. Describe two specific things that could be done to redesign that job so that employees will be more motivated to perform it.
-
Define a sequence of correlated random numbers \[ s_{k}=\alpha s_{k-1}+(1-\alpha) r_{k} \] where \(r_{k}\) is a unit-variance, uncorrelated, Gaussian pseudorandom number while \(0
-
Assume the same information as BE9-4. In BE9-4, At the end of 2014, Carpenter Co. has accounts receivable of $700,000 and an allowance for doubtful accounts of $54,000. On January 24, 2015, the...
-
Question 10 Consider a market for electricity, where there is one electricity providor. Suppose demand (in megawatt hours) is given by Q = 50 - P and that the marginal private cost of generating...
-
The bank has granted an overdaft facility to ABC company for the period. The overdraft amount is 1.500.000. The interest rate is 10% per annum, the overdraft commision is 1% and paid in advanve. It...
-
Shown Work Essential If f(x) = x sec(x), then f'(x) =
-
1.) Target Corporation's current stock price is $186 per share, resulting in a current market capitalization (market value of equity) of $93 billion. The company's PE ratio is reported at 24.7...
-
Problem 5: (express the language in terms of basic set operations) a) Prove that if L1 and L2 are regular then L\L2 (set difference) is also regular. b) The symmetric difference of two sets S1 and S2...
-
A bond pays 5.36% semi-annual coupon for 6 years and is priced at $100. Calculate the modified duration and convexity of this bond using approximate formulas (use 10 basis point change in yield)....
-
1.) Facemask Company has reported total debt of $12 million and reported total assets of $36 million. What is Facemask's Debt-to-Equity ratio? 2.) Northstar Inc has an Average Collection Period of...
-
1. Suppose we want to evaluate if there is a difference in population mean ages for Titanic passengers in 1st class versus 3rd class. Since we do not have time to research the ages for all 320 1st...
-
What are the two components of a company's income tax provision? What does each component represent about a company's income tax provision?
-
Explain whether the following consumer goods are classified as good or bad debt. Explain your rationale. a. Mortgage b. Home equity line of credit to build a new patio c. Student loan d. Gap credit...
-
Jana just found out that she is going to receive an end-of-year bonus of $40,000. She is in the 25 percent marginal tax bracket. Calculate her income tax on this bonus. Now assume that instead of...
-
The Gizmo, Inc has just announced year-end results as follows: Value of company assets.............................................$12,500,000 Value of company...
-
What are the Returns and Risks currently for the different asset classes?
-
What is the P(Gain) for each?
-
What does the time series state when graphing from the Financial Crisis to the current day for each of the asset classes?
Study smarter with the SolutionInn App