Justin is planning to retire in 15 years when he turns 65. In retirement, he needs $60,000/year in today's dollars for living expenses and $5,000/year in today's dollars for travel. He expects to live till age 90 and will be needing this money till then. His average tax rate in retirement is estimated to be 30%. Assume he will earn 7% on his investments and inflation is 2%.
Justin has a personal RRSP account which is worth $300,000 where he contributes $10,000/year. Justin also has a LIRA from his previous employer worth $200,000. Both accounts earn 7% compounded annually. Justin's current employer has a very generous DBPP for past 10 years. Justin has provided following information about his DBPP:
 

- Factor of 1.5%
- Final 5 year average earnings of $100,000
- Return is 7% compounded annually
- Inflation is 2%
Justin expects to receive CPP in the amount of $1,000/month and OAS in the amount of $600/month in today's dollars.
 

1) Calculate Justin's Retirement goal?
2) How much will be Justin's RRSP worth when he retires?
3) How much will be Justin's LIRA worth when he retires?
4) What pension from DBPP will he receive when he retires and what is the present value of his pension?
5) What is the present value of Justin's CPP and OAS on the date of his retirement?
6) Does Justin have enough money to retire? 

Answer rating: 100% (QA)

Justins retirement goal is to have 60000year 5000year 65000year in todays dollars for living expense... View the full answer