Since both Elliot and Sally are healthy, the planners recommend they delay their CPP and OAS benefits until age 70. This will give them a boost in benefits
Elliot and Sally are both first responders. Elliot has retired and Sally would like to join him soon. He is 55 years old, she is 44. They have one child, who is 10.
While Sally is working, it is critical that they save their surplus funds and invest properly. The planners assume a traditional balanced portfolio of 60-per-cent stocks and 40-per-cent bonds. The investment return assumption, net of fees, is 4.64 per cent with an Elliot’s pension has a bridge benefit of $13,800 that stops when he turns 65. After that, he gets the lifetime pension of $62,000 a year in today’s dollars.
Elliot should convert some of the RRSP into a registered retirement income fund at age 65. RRIFs are eligible for income-splitting. He should start withdrawing from the RRIF to make up for the drop in income when his bridge benefit ends. Through income-splitting, they should try to keep their individual incomes as similar as possible to minimize the lifetime household tax payable.
Sally’s bridge benefit stops in 2044 but her income can be supplemented by RRSP or RRIF withdrawals at that time. “Again, the goal is to make their income very similar.” The retirement numbers are “very strong” for Elliot and Sally since most of the investment and future income risk is assumed by their pension fund manager, the planners note. The majority of their retirement sources of income are also indexed to inflation, “which is a huge plus.
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