DrDragon4774
Assume the Year is 2018 Mary and Susan are a married same sex…
Assume the Year is 2018
Mary and Susan are a married same sex couple. They have been married for 25 years and own their own home. Their home is valued at $850,000 and they have a $200,000 mortgage. Mary will be 50 this year and Susan will be 48 this year. Mary works for Bell Canada and earns $135,000 per year. She is a member of a DBPP that will provide her with a pension of $60,000 per year at age 65. Mary contributes 4% of her salary to the DBPP annually. This contribution is matched by Bell Canada. The pension entitlement represents 3% of her salary over the best 5 years of employment.
Susan works as an office administrator for ABC Company and does not have any form of pension plan. Susan earns $55,000 per year.
Their number one goal is retirement planning. Mary loves her job and plans on working until she is 65. Susan wants to retire when Mary does so that they can enjoy retirement and travel extensively.
There assets and liabilities are as follows.
Mary RRSP $25000
Susan RRSP $13,000
Susan Spousal RRSP $275,000
Mary Income $135,000
Susan Income $55,000
Home Value $800,000
Mortgage $200,000
Mary TFSA $55,000
Susan TFSA $10,000
Assume you are Mary and Susan’s financial planner and that Mary and Susan have hired you to complete a retirement plan for them.
Which of the following represents the third step in the financial planning process?
a)Setting goals
b)Analyzing data
c)Providing solutions
d)Establishing the Client Planner Relationship
2. As an advisor you recommend that Mary maximize her RRSP into a spousal RRSP, with Susan as the annuitant on an annual basis because Mary is in a higher marginal tax rate than Susan. Is this the best strategy? If so, why? If not please offer an alternative strategy and explain why it is a more appropriate strategy
3.How much is Mary’s benefit entitlement for RRSP calculation purposes? (Please show your calculation)
4.How much RRSP eligibility would Susan accumulate in 2019? (Please show your calculation)
5. What ages should you use for the retirement projections you prepare for Mary and Susan?
a)Mary’s age for both
b)Susan’s age for both
c)Mary’s retirement age and Susan’s life expectancy
d)Susan’s retirement age and Mary’s life expectancy
Explain why you chose the answer you chose.
6.How much would Mary contribute to CPP in 2018? Assume the YMPE is $57,500 (Please show your calculation)
7.How much would Susan contribute to CPP in 2018? Assume the YMPE is $57,500 (Please show your calculation)
8.As Mary and Susan’s financial planner which of the following strategies would you recommend to them?
a) Maximize both of their RRSP’s before doing other savings
b)Maximize both of their TFSA’s before doing other savings
c)Maximize their RRSP’s and use the tax refund to fund their TFSA’s
d)None of the above
Explain why you chose this strategy.
9. At what age will Mary and Susan be forced to convert their RRSP’s into a RRIF or annuity?
10.Assume Susan decides to RRIF her RRSP at the age of 65. If the value of her RRIF at the beginning of that year is $57,500 how much is the minimum she has to take from the RRIF in that year? (Please show your calculation)
11.At age 67 Susan withdraws $27,500 from a RRIF created by the spousal RRSP. Assuming Mary had contributed to the spousal RRSP up until Susan had turned 60 how much of the withdrawal would be attributed back to Susan as taxable income?
12.Assuming you are Susan and Mary’s financial advisor what advice would you provide them in terms of the use of TFSA’s
Are TFSA’s appropriate strategy for Susan and Mary? Why?
What is the yearly TFSA limit?
What are the benefits of using a TFSA?
What savings goals are TFSA’s used for?
If they have never contributed to an TFSA what would their limits be? (Assume the year is 2019)
What happens as it relates to TFSA limits if a withdrawal is made from a TFSA?
13. Given Mary’s income in 2018 is $135,000 and based on the information provided how much would Mary accumulate in RRSP eligibility in 2019. Assume an RRSP contribution maximum in 2019 of $26,500. (Please show your calculation)
