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The Retirement Goal (comfortable client)

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This is a variation on the simple amortize ('just die broke') calculation. It is best applied to the type of client who is near retirement and reasonably comfortable, asset-wise. This client indicates they have determined an age at which they plan to retire and have a general idea of the lifestyle (goal) they wish to enjoy in their retirement years. We are assuming a retirement age of 60 and an ATI goal of $35,000. (BTW... no other program can even remotely perform this calculation)

What they wish to know is

- how feasible is the goal? and
- how can they get there from here?

The answer to both of these questions is dead simple... using the AMORTIZE function, and the first column in the data entry grid.

Here's what to do...

Once all the client's data (salary and RRSP contribs, current capital, loan, insurance parameters, etc) is entered, you have one additional element to add.... their retirement goal. Here's how to enter it..

In the first column of the data entry grid, scroll down to the cell where retirement starts, making sure the column cells are empty down to that point.

Click on the single cell where retirement starts (in this case 60). The program will prompt for a value.

Enter the amount of the client's 'retirement goal'. (it is $35,000.... so enter 35000)

The program will now ask if you want to 'copy all the way down?'. Hit "OK".

To recap.... you should have the first column ("net income target") EMPTY from his current age down to retirement and 35000 from retirement all the way to the bottom. (Note... the amounts in the first column are expressed in today's dollars. They are adjusted for inflation.)

Finally.... Compute{Alt C} and Amortize. Three seconds later.....

You are done. Since we amortized, the capital should just run out at 95. (Click on "capital" graph to make sure. The $35K target should be at least feasible... if not, the math won't solve.)

Now print the "Retirement Projection' and examine as follows:

The answer as to how feasible our $35K goal is can be seen in the second to last column on the printout.... "Net Income tdays $" You should see the $35,000 in the range from age 60 to the bottom and in the range above that, you will see an amount either higher or lower than the 35K.

This amount represents the regimen/lifestyle the client will enjoy in order to attain the $35K goal. If it it is higher, then this indicates his goal is feasible, if lower, then it indicates that a 'diet' is necessary.

If extra low, then it is time for "the talk" i.e. some serious re-thinking. (the brochure... 'Bank Robbery as a Career' is useful here)

The answer as to how to get there is readily apparent as well.... the 2 columns in the 'Regist (RSP/... Funds' section ('Withd' and 'Contrib') and the 2 columns in the 'Non Registered Funds' ('Withdr' and 'Deposit') are what the individual must save in order to get to their goal.

       Regist (RSP..         Non Regist..
   Withdr Contrib         Withdr Deposit
          18,000                 5678
          18,000                 5001


Normally, for someone with salary, there will be funds going into the RSP ('Contrib') and (most likely) more going into NonReg ('Deposit')

As an aside... sometimes, when we have set a relatively high goal in relation to our salary, then the program won't invest in non reg, and in fact, will reduce (disallow) the amount we have specified for the RSP contributions......

       Regist (RSP..         Non Regist..
   Withdr Contrib         Withdr Deposit
          11,399                 0
          11,411                 0


We are finished.... we have indicated both what will be required in investment savings (reg+nonreg), and what their lifestyle will be pre-retirement in order to get to a $35K post retirement.

Leaving an estate


The above example was a 'die broke, damn the kids' scenario. Had the client wanted to ensure that his estate delivered a minimum 'after tax' value, then one additional step would be taken...

After entering the $35K retirement target in the 1st column (only from age 60 down, remember), scroll down to the runout age (it is usually 95) and enter the single number which you wish for the 'net to estate'.

Let's say it was $200K (i.e. we want to, not only enjoy a $35K retirement, but we want to ensure an estate of at least $200K) Enter the single amount 200000 in the age 95 cell.

Finally, Amortize. The results and analysis are identical as before, except there will be a reduced pre-retirement lifestyle and a higher savings regime to accomodate the estate needs.

Note... the 'net to estate' target entered in the final year does not include any life/UL insurance benefit!

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