Defined Benefit Pensions

Questions:

For the section that asks this question:

"Savings in Addition to Employer Plans - Annual Amount Saved in Registered and Non-Registered Assets"

Should I be calculating this as including the amount that goes into the Defined Benefit plan since that reduces the RRSP amount that I can contribute? i.e. the amount here = Defined Benefit + my RRSP contributions + TFSA contributions

Answers:

You should enter the defined benefit contributions on the Pensions page on the Current Employer Plan tab. The program figures out a pension adjustment that reduces the RRSP room based on the estimated annual accrual calculated for the defined benefit pension.

The amount for this field is any savings for retirement purposes  other than through an employer pension, including Group RRSP, defined benefit, defined contribution.

By: RetireWare / Equisoft On 11:08 AM

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How to Determine Required Savings

Questions:

I purchased RetireWare to derive an accurate number for annual savings for my wife and I given a set of retirement goals and lifestyle requirements.

I have an account set up under the email above but feel that something isn't quite right with the calculations after playing around with the numbers.

Here are my questions:

1. My wife is currently not working as our kids are young. She plans on starting to earn income again next fall. That income will likely increase again once our 2yr old son goes to school full time in 3 more years. I can't seem to figure out a way to incorporate that graduated income for my wife into the calculations. Can I do that in RetireWare?

2. Our plan was to have an "active" retirement until I hit 75 and my wife hits 65 (ie. 15yrs into our retirement as currently planned in RetireWare) and then switch to a less active retirement. How do I account for a graduated level of retirement expense in RetireWare?

3. It seems that the "Principal Residence" under Financial Information is being double counted for my wife and I. I entered the "Current Market Value" of our house under my wife's profile *and* my profile. Should I be entering it once to avoid double counting it?

Answers:

1. You could add the income under 'Other Income' and can enter up to four periods, but this type is for after retirement and does not allow for saving for retirement. Instead you can enter the average income she'll earn between now and retirement, considering $0 for a coupe of years, a part-time wage after and full-time when the kids are in school full-time.

2. On the Forecast page under 'Retirement income target', there is a section called 'Advanced'. There you can apply reductions or increases to your retirement icnome goal for up to three periods during retirement.

3. Yes you should enter under one spouse or enter 50% of the value under both.

By: RetireWare / Equisoft On 11:04 AM

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Determining Optimal Savings

Question:

I modified our "Annual Amount Saved" until the combined (ie. me and my wife) Summary said that our assets will be sufficient. Then I changed our retirement ages to 65/55 and played with the "Annual Amount Saved" again until I saw that our assets are sufficient. Is this a good way to figure out how to make the retirement plan work?

Answer:

Yes, you go to the Forecast page and on the Savings tab to increase your annual savings. Then switch to your wife's view and increase her savings. Click the Refresh button on the View menu to see your revised results.

Even with higher savings, you may need to reduce your budget slightly or plan to retire later (even one year may make a good difference). But first try to save more and it should take you close to having enough funds for retirement.

if you achieve better than expected returns you can then periodically revise your plan as you get closer to retirement and have greater clarity on the feasibility of retiring at age 60.

Be sure to verify that you are not hitting the maximum contribution limit in 'Savings Plan' on the Forecast page. For example, if it's set at 30% of income and you earn $80,000 per year, the program will try to find the required savings, but only up to $24,000. You can this this maximum up to 100% of income. But as I recall, you are in a higher salary range, so what you are stating is correct.

By: RetireWare / Equisoft On 11:01 AM

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Pre-retirement Planning

Question:

I do not plan to retire for another 10 years. So does the software allow me to input my current income details (indexed for inflation) and asset (residence, RRSPs, investment portfolio) and liability balances as well as current expense budget (indexed for inflation) to see how I am trending to reach my retirement goals

Answer:

Yes you enter your income before retirement and it will increase each year in line with a wage increase assumption. You can also enter all assets and liabilities (in particular mortgage balances on properties and remaining term).

For the budget, you can complete a pre-retirement budget and a post-retirement budget separately. Your post-retirement budget will be used for setting your retirement income goals (and is indexed as well to retirement and each year thereafter).

By: RetireWare / Equisoft On 11:59 AM

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Education Savings

Question:

I'm not sure where I enter my RESP contributions.. Can you please help?

Answer:

You can enter RESP contributions on the Budget Information tab on the Pre-retirement Budget page. There is also a stand-alone RESP planning tool on the Applications tab on the main page.

By: RetireWare / Equisoft On 8:02 PM

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Maximum RRSP contributions

Question:

The program does not seem to increase RRSP contribution to the maximum allowed in coming years, even though the Government has announced increased limits.

Answer:

The RRSP maximum annual contributions for future years are in the program.

You need two conditions to hit the annual maximum: high income and high annual savings. If both of these are met, then the maximum will apply.

In order to see RRSP contributions during the first year of your plan, ensure you put the applicable amount for the current year RRSP deduction limit on the 'RRSP Deductions' tab of 'Registered Investments'.

By: RetireWare / Equisoft On 3:42 PM

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