Monday, October 24, 2016

Retirement income goal and rates of returns

4:48 PM


As I am new to this program, I just have a couple of questions before I start rolling it out to  my clients.

When it asks for Annual retirement objective (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?

Standard forecast rates of returns: what rates are used? How does that work ? The other two choices (Historical and Custom ) seem straight forward.


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.

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..

Note that these do change each year based on historical averages adjusted for current trends.


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