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In two years, when Trish is 60 and Ellis is 62, they can begin drawing on their investments. Their registered assets, which should hold $360,225 at retirement, will be growing at an estimated rate of just one per cent over inflation due to their high investment fees. That would give them $12,250 per year for 35 years starting in 2022 to Tracy’s age 95, Winkelmolen estimates.
The couple’s TFSAs, with a present value of $172,000 and growing with contributions of $12,000 per year for the next two years would increase to $195,426 with the same assumptions to a value of $199,820 and then generate a non-taxable return of $6,725 per year to Trish’s age 95.
On top of their investment income, Trish will have a defined-benefit pension of $39,480 per year and Ellis a DB pension of $57,876 per year.
Retirement income projections
In the first two years of retirement they will have total income of $12,250 from RRSPs, $6,725 from TFSAs, and $97,356 from pensions. That adds up to $116,330 per year. With splits of taxable income and no tax on TFSA cash flow and a 16 per cent rate on the rest, they would have $8,235 per month to spend. That’s more than their after-tax goal of $7,600 per month.
After Ellis reaches 65, his pension loses his bridge benefit of $9,780. He will gain Old Age Security, currently $7,362 per year, and estimated Canada Pension Plan benefits of $14,156 per year. Their pre-tax cash flow would have risen to $128,070. With splits of eligible income and no tax on TFSA cash flow, they would pay tax at an average rate of 18 per cent and have about $8,850 per month to spend.