I'm 33, wife is 41. I plan to semi-retire at 57 (24 years from now).
Currently, my ultimate goal is to get as much $ into RRSP's and investments now while I'm lucky to have a high income and minimal expenses and the kids are young (Maxing their RESP's as well).
I know there are Contribution limits, but are there contribution "recommendations" based on CPP, OAS clawbacks, etc? I don't want to have busted my tail for 20 years only to have too much money in RRSP's at retirement.
With my children's RESP's, the perfect contribution amount give or take a dollar or so is $96 bi-weekly. This ensures max government contributions, etc. If I contribute more, the government won't, so I've got a "sweet spot."
Stepping it up a notch, is there a similar approach to retirement? Essentially, in today's dollars, what's the "perfect amount" to have in an RRSP for someone retiring today taking OAS into account? I read somewhere that it's about $600k per person to live quite comfortably. I know it has to do with lifestyle, life expectancy, etc, but some sort of an excel tool, website calculator would be awesome to plug some numbers in and see a "roadmap" with a few scenarios.
Something which incorporates:
1. Years remaining until retirement
2. Inflation at 2,3,4%
3. RRSP growth at 4,5,6%
4. OAS clawbacks at particular levels of contribution.
Does a tool like this exist? Will OAS even likely exist decades out? Is it even reasonable to think that a tool could help maintain a target year after year and "rebalance" investments accordingly sortof like the couch potato, but for an overall strategy.
I want to have a goal in mind, but am not sure what that goal should be... So I keep saving my pennies hoping that one day I'll get there...
The calculator is a companion to Zvi Bodie' book, Worry-Free Investing.
If you don't have Excel license, try to open the spreadsheet in Open Office. I expect it will work - the calculations are pretty basic.
ADDED: The tricky part is to estimate Line 10, Social security benefits. I enter zero dollars, even though I fully expect to receive CPP and OAS. In effect, I introduce a margin of safety in the calculations.
Given the long time line my own thought would be max out the TFSA contribution every year and then try to max the RRSP if the funds are there.
You can re-balance in future years, make hay while the sun shines.
OAS may not be around then but even today those I know who hit the claw-back point from an income stand point it does not impact their lifestyle at all.
The only thing it does is leave an emotional outlet kind of if I didn't save for my retirement I'd have this 500.00 a month from the government like those that didn't save enough.