Strategic Retirement Planning for Long-term Financial Security

The assignment presents a comprehensive retirement planning strategy for Tom and Joanne, aged 39 and 37 respectively, who aim to retire at 65. It outlines SMART goals—Specific, Measurable, Achievable, Realistic, Time-bound—to secure their financial future while maintaining their current lifestyle. The plan involves calculating expected retirement expenses projected over a 25-year period, considering inflation and other economic factors. Additionally, it explores income sources like the Canadian Pension Plan (CPP), Old Age Security benefits, RPP pension income for Tom, and Joanne's DCP plan. Assumptions include fixed annual returns, salary growth rates, inflation, and fund charges. The goal is to ensure their combined retirement income exceeds projected expenses, facilitating a smooth transition into retirement while supporting dependents.

Running head: RETIREMENT PLANNING
Retirement Planning
Name of the Student:
Name of the University:
Author’s Note:

1
RETIREMENT PLANNING
Answer to (a)
Tom and Joanne are couple and have the idea constructing a retirement plan with the
help of which they can have a secured life even after their retirement and maintain their
current lifestyle after retirement. It is therefore essential to understand the plans and
objectives of the couple with the help of which they can earn distinct amount of money with
the help of which they can have a secured and healthy lifestyle. The couple are aged 39 and
37 years and they have the intention of getting retired at the age of 65 years. They have 3
children and have and every one of them are dependent on their parents. Hence the financial
objective that is in respect to the SMART goals are as follows:
Smart The key focus has been to construct a
retirement plan with the help of which the
couple can understand the amount of
money they need to invest in various areas
in order to earn significant amount of
money with the help of which they can
have a sustainable and similar lifestyle
even after retirement. They even want to
make their children independent and
secured and so have educational
investments as well. The couple even wants
to pay off their mortgage before their
retirement and therefore wishes to
undertake investments in that manner.
The couple has been saving a limited

2
RETIREMENT PLANNING
amount for the retirement savings plan
and are in the opinion that this money
would come in handy with the help of
which they can have a secured future.
Measurable The process of retirement planning is
undertaken by most of the individuals when
they are middle aged. Therefore more than
80% of the human beings think of making
retirement planning in order to have a healthy
and smooth lifestyle. Therefore, in order to
understand the money that would meet their
demands after retirement, calculations and
assumptions need to be taken with the help of
which the amount of money that is required
after retirement can be understood.
Therefore, the goal is definitely measurable.
Achievable There are various retirement planning firms
and consultants that are available in the
economy in order to assist any individual
with their retirement planning. The process is
initiated by understanding the income and
expense of the client and thereafter looks into
the investments that have been undertaken by
the client. On proper assessment of these
details a plan is constructed with the help of

3
RETIREMENT PLANNING
which the retirement planning process and
the amount that can be generated in the future
with respect to the expenses are understood.
Hence, the financial goals and objectives are
easily achievable if the individuals look to
obtain the optimum money after retirement.
Realistic Retirement planning is realistic in nature as
individuals need to think about their
retirement from the very beginning with the
help of which they have a secured future life.
The couple have three children and therefore
making their future secure is even their
objective and therefore after making
investments on their education and paying off
the mortgage before retirement is even a task
before they start saving in an effective
manner with the help of which they can
undertake investments for the purpose of
retirement. Hence, the goal about the process
of retirement is genuinely realistic.
Time Frame The couple are aged 39 and 37 years and
therefore and the couple have the idea of
retiring at the age of 65 years. Hence, they
have a long time period within which they
can plan and save their money in the

4
RETIREMENT PLANNING
effective retirement plans and policies with
the help of which they can secure their life
after retirement. They have a projected time
period of 25 years within which they can
attain their goal that has been identified
earlier.
Answer to (b)
This section of the paper tries to highlight the retirement expenses that have to be met
by the couple and accordingly their income has to be made so that after meeting the expenses,
they would have adequate money for any other desires. The table below explains the current
and the future retirement expenses.
Particulars
Amount (Current
Dollars) Amount (Future)
Property Tax $5,800 $10,753
Groceries $17,400 $32,259
Insurance $675 $1,251
Car Expenses and
maintenance $2,000 $3,708
Credit Card $4,300 $7,971
Medical Expense $3,500 $6,489
Travelling Expense $6,000 $11,122
Fuel $1,750 $3,244
Life Insurance $66 $122
Expected Retirement
Expense $41,503 $76,919
This table explains that the expenses in the current dollars would account to $41,503
and this is calculated by examining the current expenses of the couple and then dividing it
with the value that is attained by deducting the marginal tax bracket from one. The marginal

5
RETIREMENT PLANNING
tax bracket has been assumed to be 15% and therefore .15 is deducted from 1 and thereby the
current retirement expense has been calculated. While calculating the future expense value
there have been several assumptions like the rate of inflation has remained fixed for all the
years and there have not been additional expenses. The number of years before retirement has
been taken as 25 years and accordingly the expense values has been calculated. Hence, the
retirement expense for the couple at the age of 65 year would be $76,919. The couple have to
maintain their income more than $76,919 in order to maintain their style of livelihood.
Answer to (c)
The Canadian Pension Plan (CPP) is a retirement plan that is reliant on how much one
has contributed and how long one makes contributions to the CPP when they become
eligible. As the couple would be taking the benefit at the age of 65 years, the monthly
payment amount will rise by 0.7% for every month after the age of 65 years for the delay
receiving up to the age of 70 years. This explains that of the couple starts receiving the
pension at the age of 70 years then they would receive 42% more than the amount they would
have received at the age of 65 years. At the age of 65 years they would either loss any money
or gain any additional money.
The amount that would be annually allowable from the gross income is $55,900 and
the value that would be contributed each month would be the $2,593. The Old Age Security
benefits that would be received by the couple would include the guaranteed income
supplement, allowance and survivor allowance. The couple have been living in Canada since
birth and at the age of 65 years they would be residing for 47 years in Canada after
completing the age of 18 years and therefore the old age security annually that the couple
would receive is $7,039. The assumptions that have been given earlier have been used in this
calculation as well. The inflation rate has been put forth s 2.5%.