1. Tchavdar Elenkov, BA Econ, CFP Insurance and Financial Advisor How much do you have – and how much do you need?

2. Agenda  Retirement Goals  Choosing a retirement lifestyle  Consider all your sources of income  Consider all your expenses  Determining how much you need  Live the retirement you want

3. Retirement Goals

4. What are your goals for retirement?  Having enough to live and enjoy life  Leaving a legacy R E T I R E M E N T G O A L S

5. Meet Ray and Sarah  Early 40’s  Earning a good income  Saving for kids education  Hope to pay off house in 5 years

6. R E T I R E M E N T G O A L S Meet Ray and Sarah (cont.)  20 years until retirement  Contributing to RRSPs for 15 years  Want to enjoy retirement to the fullest

7. Choosing a retirement lifestyle

8. Did you know? C H O O S I N G A R E T I R E M E N T L I F E S T Y L E  How you want to live = how much you will need  If you don’t have a plan no amount of money may be enough!

9. Choosing a retirement lifestyle C H O O S I N G A R E T I R E M E N T L I F E S T Y L E  Most important factor in determining how much money you’ll need  Do you want to…  Work part time?  Pursue a hobby?  Volunteer?  Travel frequently?

10. What’s your retirement lifestyle? C H O O S I N G A R E T I R E M E N T L I F E S T Y L E  Moderately 60–70% pre- retirement income  Comfortably 70–85% pre- retirement income  Well 85–100% pre- retirement income

11. Consider all your sources of income

12. How much will the government help? S O U R C E S O F I N C O M E  Various different government sources of income  Amount received is based on your income

13. Who‘s eligible for Canada Pension Plan (CPP) benefits? S O U R C E S O F I N C O M E For those who:  Have been in paid employment  Have made at least one payment into the CPP plan

14. How CPP benefits work S O U R C E S O F I N C O M E  Based on how much and how long you contributed  Designed to replace about 25% of the earnings paid into the plan

15. How much can you expect to receive? S O U R C E S O F I N C O M E  You must apply to receive CPP benefits  Maximum CPP income at age 65 is $814.17 per month, or $9,770.04 per year

16. Who‘s eligible for Old age Security (OAS) benefits? S O U R C E S O F I N C O M E For those who:  Are 65 or older, whether you have held paid employment  Meet resident requirements

17. How OAS benefits work S O U R C E S O F I N C O M E Payments are:  Taxable  Subject to clawbacks

18. How much can you expect to receive? S O U R C E S O F I N C O M E  You must apply to receive OAS benefits  Maximum OAS benefit is $471.76 per month

19. Who‘s eligible for the Guaranteed Income Supplement (GIS)? S O U R C E S O F I N C O M E For those who:  Reside in Canada  Receive a basic, full, or partial OAS pension and who have little or no other income

20. How GIS benefits work S O U R C E S O F I N C O M E Payments are:  Based on your annual income  Subject to reapplication each year  Not subject to income tax  Dependant on your receiving the OAS pension

21. How much can you expect to receive? S O U R C E S O F I N C O M E  Maximum GIS benefit is $560.69 per month for a single person and $365.21 for the spouse of a pensioner

22. Who‘s eligible for Spouse’s Allowance? S O U R C E S O F I N C O M E For those who:  Are low-income earners between 60-64 if still married  Who have a spouse or common-law partner who is entitled to receive OAS and GIS benefits

23. Who‘s eligible for Widow's Spouse’s Allowance? S O U R C E S O F I N C O M E For those who:  Are low-income earners between 60-64 years  Whose spouse or common-law partner is deceased

24. How Allowance benefits work S O U R C E S O F I N C O M E Payments are:  Replaced by the OAS after age 64

25. Consider all your expenses

26. S O U R C E S O F E X P E N S E S The effects of inflation on income “The most insidious force that can eat away at your savings is inflation”  Historically inflation has averaged 3% per year, so plan to have your income increase by about 3% per year

27. How inflation will effect Ray & Sarah S O U R C E S O F E X P E N S E S

28. Other things that could take a bite out of your savings S O U R C E S O F E X P E N S E S  Lack of company health benefits  Retirement homes  No more company expense account  No more company stock options and RRSP contribution  Retirement leisure activities

29. Determining how much you need

30. H O W M U C H Y O U N E E D Method 1 - Income Replacement Ratio Method  Percentage of working income you’ll need to maintain the same standard of living (60-100%)

31. H O W M U C H Y O U N E E D Let’s look at an example  Total annual income $100,000  Pay $30,000 in taxes  $5,000 put into RRSPs  70% income replacement ratio Require $45,500 after tax

32. Method 2 - Tracking Cash Flow  More detailed examination of how much you spend and where you spend it  Extremely useful the closer you get to retirement  Categorize your expenses (home, financial, medical, etc.) so you understand where you spend your money  Able to more accurately adjust for expenses H O W M U C H Y O U N E E D

33. Live the retirement you want

34. Things you can do now to ensure a happy retirement L I V E T H E R E T I R E M E N T Y O U W A N T  Planning  Take advantage of RRSPs  Consider other sources  Talk to your advisor