Download - Getting Close….Retirement Income Options
Getting Close….Retirement Income Options
Today’s meeting
• How much do I need to retire?
• Sources of retirement income
• Retirement planning tools
• Countdown to retirement……
How much do I need to retire?
How much income will you need?
Your hopes and dreams?
Why Plan?
Sources of retirement income
Sources of retirement income
Old Age Security (OAS)
2. Employer
Canada Pension Plan (CPP)
3. Personal
Pension Plan
1.Government
Individual RSP Plans
Non Registered Plans
Other Savings or Assets
1. Government Benefits
Maximum yearly amount for 2010
• Old Age Security = $ 6,204• CPP/QPP* = $11,210 at age 65*
= $ 7,847 at age 60*
For more information visit the Service Canada web site at www.servicecanada.gc.ca
*Payout varies depending on years of service, salary, amount of contributions, etc.
1. Government Benefits
Average yearly amounts for 2008*
• Old Age Security = $ 5,874• CPP/QPP** = $ 6,018 at age 65
= $ 4,212 at age 60
*March 2009 stats from www.servicecanada.gc.ca
2. OCAD Pension Plan
Annuity
Registered Pension Plan (RPP)
Life IncomeFund
Annuity
“Trading” Lump Sum for Regular IncomeLose Control of Your InvestmentsFactors = Age + Current Interest RatesLife Expectancy4: Males = 77.4 Females = 82.2
Life Term Certain
Joint +Last Survivor
Types of Annuities
Single Life Annuity
Monthly payments are payable for annuitant’s life and cease upon death
Highest payout
Term Certain
Payments are made to the annuitant for their lifetime
If annuitant dies before the end of the guaranteed period, the payments continue to their beneficiary until the end of the guaranteed period
Guarantee periods can be 5, 10, or 15 years
Types of Annuities
Types of Annuities
Joint and last survivor
After the death of the annuitant, the annuity payments continue to their spouse until the spouse’s death
Payments to surviving spouse can range from 60% to 100% of annuitant’s payout
Sample annuity quotes - $100,000 premium
No Annuity Type Age 60 Age 65 Age 71
1. Single life annuity with 120 payments guaranteed $662.13 $705.13 $790.66
2.Joint life annuity, reducing to 60% upon death of primary annuitant, with 120 payments guaranteed
$584.18 $628.28 $702.42
3.Joint life annuity, continuing in full until the death of the surviving spouse, with 120 payments guaranteed
$562.77 $601.92 $671.49
Payment frequency: monthly
Annuitant : male Co-Annuitant: femaleSource of funds: Registered Pension Plan (Ontario)
2. OCAD Pension Plan
Annuity
Registered Pension Plan (RPP)
Life IncomeFund
Life Income Fund (LIF)
Withdraw % of Account Annually% Varies According to AgeContinue to Control Investment Decisions
Example: $100,000 AGE MINIMUM MAXIMUM(Annual Payments) 55 $ 2,857 $ 6,850
60 $ 3,333 $ 7,38065 $ 4,000 $ 8,22070 $ 5,000 $ 9,71075 $ 7,850 $12,820
Life Income Fund (LIF)Date of birth: March 1, 1941Amount invested: $100,000.00
First payment date: 15 April 2006Type of income payment: MAXIMUM PAYMENTS
4% ROR 5% ROR 6% RORMonthly Monthly Monthly
Year Age Payments Payments Payments
2006 65 $604.59 $604.59 $604.592007 66 $598.32 $602.49 $606.652008 67 $587.94 $597.95 $608.042009 68 $577.76 $593.47 $609.462010 69 $577.78 $589.05 $610.912011 70 $557.98 $584.69 $612.402012 71 $548.39 $580.40 $613.942013 72 $538.98 $576.16 $615.522014 73 $529.76 $572.00 $617.152015 74 $520.73 $567.91 $618.842016 75 $511.89 $563.90 $620.602021 80 $470.57 $545.23 $630.83Approximate value (28/12/2021): $43,319.01 $50,701.51 $59,250.88
Pension legislation change for Ontario
Effective January 1, 2010
You may unlock 50% of the value of your pension plan upon conversion to a Life Income Fund
3. Personal Savings
Personal Individual RSP Plans
Non Registered Plans
Other Savings or Assets
Personal savings - RRSP
RRSP
Annuity
Retirement Income Fund
Cash
Retirement Income Fund (RIF)
Mandatory RSP Conversion @ Age 71Prescribed Minimum Payment Based on Age< 71 Years = 1/(90-Age)> 71 Years = Formula* (7.38% - 20%) Continue to Control Your Investments
Example: $100,000 AGE MINIMUM(Annual Payments) 55 $ 2,857
60 $ 3,33365 $ 4,00070 $ 5,000 75 $ 7,850
Retirement Income Fund (RIF)
Date of birth: 1 November 1944Amount invested: $50,000.00 Issue date: 4 October 2004Expected rate of return: 5.000%First payment date: 15 January 2005
Type of income payment: EQUAL PAYMENTS
Year Age Monthly payments Jan 1st Value2005 61 $500.00 $50,598.00 2006 62 $500.00 $46,978.00 2007 63 $500.00 $43,176.00 2008 64 $500.00 $39,185.00 2009 65 $500.00 $34,994.00 2010 66 $500.00 $30,593.00 2011 67 $500.00 $25,972.00 2012 68 $500.00 $21,120.00 2013 69 $500.00 $16,026.00 2014 70 $500.00 $10,677.00 2015 71 $500.00 $5,060.00
The account will be exhausted with a final payment of $165.95 on 15 November 2015
Retirement planning tools
• Account balances
• Provide or change investment instructions
• Process inter-fund transfers
• Retirement planning tool
• On-demand statements
www.grsaccess.com
GRS Access
Retirement Income Illustrations
• You have not used our online retirement calculator to save your assumptions or preferences.
• Chart created using the basic information we have for you based on the previous calendar year.
You're not on track
• You've established a retirement budget.
• You've saved your information in the onlineretirement calculator.
• You are not on track andso you need to makeadjustments to yourretirement plan.
You are on track!
• You've established aretirement budget
• You've saved yourinformation in the online retirement calculator.
• You are on track to achieving your retirement income goal!
So, how much do I need?
Smart tools – your retirement tool kit• Library of articles• Flexible retirement calculators• Glossary of terms
1-800-724-3402
Ask to speak to one of our retirement planning specialist
• Provide or change investment instructions
• Process inter-fund transfers
• Update information
• 8:00 am to 8:00 pm (ET)
Client Service Centre
Statements
• Mailed semi-annually
• Personalized net rates of return
• Custom messages
• Also available on GRS Access
Countdown to retirement…..
3 to 5 years before retirement
Will you have enough to retire?• Review your investment portfolio.• Know your retirement savings.• Re-evaluate your lifestyle and residence needs.• Estimate your living expenses.• Find out what your house is worth.• Estimate your retirement income.
Countdown to retirement………..
1 year to go
Get your affairs in order.
• Verify your retirement milestones.• Review your insurance needs.• Think about estate planning.
Countdown to retirement………..
6 months to go
The home stretch.
• Update beneficiary information.• Apply for government pensions.• Apply for company pensions.• Look to available resources for help.
Countdown to retirement………..
Why plan?
“Someone is sitting in the shade today because someone planted a tree” – Warren Buffet