Trying for Freedom 55 ... in 10 years

[steve41]

Sorry Steve, I just re-read your first question. My gross salary is $104,000 per year.

I am in the middle of my annual release, so I am kind of busy.... The annual 7000 bonus.... is that a yearly occurrence, or is it just this year, and is it taxable?

[mind_business]

Steve, the $7000 bonus is an expected amount per year (based on the average bonus amount during the last 5 years). I have received a bonus for all but 2 years of service. The $7000 is the net amount after tax.

[steve41]

OOPS. I forgot.... can you specify your annual db pension income in actual $ starting at age 56, rather than as a present-valued lump sum?

[mind_business]

Scenario #1 - Assume my income does not increase, here's my numbers at 56:

Lump sum = $765,726.69 *
or, if I opt for monthly lifetime pension payments = $3,362.76 per month with a spousal survival benefit of $2,017.66 per month

Scenario #2 - OR, assuming my income increases by 2% per year, my numbers at 56 are:

Lump sum = $898,440.31 **
or, if I opt for monthly lifetime pension payments = $3,945.58 per month with a spousal survival benefit of $2,367.35 per month

[mind_business]

Thanks Steve for reviewing my situation. I definitely appreciate it. If you need other piece of info, I'm sure I'll be able to dig it up for you.

Please don't think I expect answers right away. You're busy right now, with other more important things on your plate. My stuff can wait.

Thanks again!

[steve41]

Believe it or not, I get groggy in the afternoon. I can do these in my sleep, so it isn't a problem.... in fact it relaxes me.

I had to do a bit of fancy footwork on the nonreg pension. PM me and I will explain. Most DC pensions are registered (LIRAs) so I had to fabricate your situation a bit.

Mrs Freedom
Mr Freedom

I didn't get fancy with income splitting, but I started you off contributing $9K to a spousal RRSP. Look it over and check for errors.

Bottom line... at a 4% rate, dying broke at 95, you can see a $60K after tax lifestyle.

[mind_business]

I'm going to have to spend a bit of time digesting the information. Looks very detailed.

A couple things that may need some tweeking are my RRSP contributions. It looks like you've max'd out the contribution for us, however since I have a company pension, my maximum RRSP allowable contribution is reduced by my Pension Adjustment amount. This will significantly reduce my RRSP generated income.

Also, I plan on quickly max'ing out our TFSA contributions to $30,000 (approx 1 year) within 12 months ($2500 per month). After that, we'll continue to max out our contributions at the maximum allowable ($10,000 total per year for the two of us).

Any additional savings will go to non-registered savings/investments. After the TFSA and RRSP contributions are max'd out per year, we'll invest the remaining into the non-reg account.

[steve41]

OK.... I entered a PA of $9K and enhanced the TFSA contributions. The interesting thing is that the difference between an RRSP vs a TFSA vs a nonreg contribution strategy doen't effect the ATI outcome to any great extent. I changed the PDFs, so download them once more as above.

[mind_business]

I came to the same realization as I was looking at the data. The saving differential is very little considering I'm still contributing approx the same amount in my TFSA as I would have in the RRSP portion without a PA.

[mind_business]

Thought I'd update my numbers from my original post of Sept 26,2011. I'm doing this more so I can see if we've made any real progress.

Assets:
- $ 280,000 House
- $ 34,830 RRSP(s) [was $ 31,615]
- $ 3,957 TSFA (mine) [was $ 1,162]
- $ 3,957 TSFA (Wife’s) [was $ 1,162]
- $ 2,302 Investments Non-RRSP [New - my play money in high risk stocks]
- $ 7,166 Cash [was $ 4,603]

- $ 212,220 DB Pension (current cash value – based on 21 years of service)
$ 544,432 Total [was $ 530,761]

Liabilities:
- $ 3,744 Credit Card [was $ 0 ... booked our Cuban Vacation ]


Got to say ... I love no longer having a mortgage!!! Our saving rate has increased considerably.