Monday, November 10, 2014

Income Goals and Rates of Returns

8:15 PM



Questions:

I just have a couple of questions before I start rolling it out to  my clients.

1. When it asks for Annual retirement objective … choice # 2 – total dollar amount:   Will this include all sources such as CPP , OAS , and then net of tax if indicated below? Or, is this just going to draw from one’s own savings ?

2. Standard forecast on rate of return: what rates are used? How does that work?

Answers:

1. The retirement income objective is how much you want to have each year during retirement. The income forecast tries to meet the goal with CPP, OAS, other income or company pensions, and make up any gap from invested assets.

Note that the retirement objective is in terms of "today's dollars". So if you enter say $50,000, and retirement takes place in 10 years, and inflation is 2%, the actual retirement objective in the year of retirement will be 50,000 x 1.02 ^ 10 or $60,949.

2. The standard are the default values shown in the Custom Forecast.

  • Cash and equivalents: 2.25%
  • Fixed income: 6%
  • Canadian equity: 7%
  • US equity: 8%
  • International equity: 8%

The above are exclusive of investment management fees.

The standard also has values for inflation, real estate and wage increase, also shown in the default values.


0 comments:

Post a Comment

 

© 2018 Risk Blog by Equisoft Inc. All rights reserved. Designed by Templateism

Back To Top