A unique 2.1 % inflation rate is applied on the following items: Annual Gross Employment Income, Retirement Income Needs, Annual Contributions and Other Annual Retirement Income.
The effective tax rates, as well as the BPA (Basic Personal Amount) and federal abatements used to calculate the tax rates are determined according to income.
The projection tool is for the General public who wish to rapidly access his personal retirement situation. For a thorough analysis, you need to consult a financial service professional.
Age: age at the moment of the projection (current age)
Retirement starts January 1st of the year specified and life expectancy ends January 1st of the specified year.
Other Retirement Income at retirement (for example: income from a Defined Benefit Pension Plan) are considered during all the retirement period.
Registered Investments includes Registered Retirement Savings Plan (RRSP), Spouse RRSP, Locked-in Retirement Accounts (LIRA), Deferred Profit Sharing Plans (DPSP) and accumulated amounts in Defined Contribution Registered Pension Plans (DCPP).
Annual contributions to Investments accounts (Registered, Tax-Free Savings Account (TFSA) and Non Registered), ends at retirement age.
In the projection, all registered accounts (RRSP, LIRA, DPSP and DCPP) are treated the same.
Registered accounts are not taxed, except in retirement when disbursements are required.
After retirement, tax is calculated on the income of the non-registered accounts and on all income/cash flows at the rate of the owner. This amount is then added to the total net retirement needs and withdraw from the income sources.
Registered accounts are not taxed until money is withdrawn and then the amount is taxed. The exception is the TFSA which is not taxed on capital withdrawal or investment return.
RRSP are automatically converted to Registered Retirement Income Fund (RRIF) the year the investor turns 72 years old. Minimal required withdrawals, based on provincial tables, are made from RRIF accounts after age 72. DPSP and LIRA are the same as RRSP.
If the investor retires prior to age 72, and if additional income is not required from registered accounts, they will not be converted in RRIF or Life Income Fund (LIF) and all converted RRIF will automatically be converted back to and RRSP.
If the retirement incomes are not sufficient to cover the projected retirement expenses, disbursements are made from non-registered accounts first and then the other registered accounts. Minimum and maximum disbursements prescribed by law for the registered accounts are in all cases respected.
If the retirement incomes are more than the required retirement expenses, the difference is re-invested into the owner's non-registered account. The rate of return is applied to the account.
Old age Security is always included by default, at age 65.
If the net income is sufficiently high, the government clawback on the OAS will automatically be calculated.
For the (Quebec Pension Plan) QPP as well as other Retirement Incomes, the program uses, by default, the Retirement age specified to apply the various incomes. The QPP pension is the maximum pension for the retirement age specified. If the retirement age is less than 60, the QPP will start at age 60.
Order of account disbursement
Money is withdrawn from an investor's account in the following order: non-registered, TFSA, registered.
The Life Insurance Index projection is for the General public who which to rapidly access his personal situation in case of death. For a thorough analysis, you need to consult a financial service professional.
The projection calculates the amount of insurance required to replace the net income (indexed) and liabilities specified for a defined term. The Income Replacement Needs is calculated using a rate of return of 3%.
The defined term is determined as follow: the number of years between the current age and the retirement age specified.
The projection calculates the net income to be replaced, based on the gross income and the income tax rate of the insured.
The projection is for and individual.
All insurance policies entered are assumed to be currently in-force. The face value for all policies entered will be used in the calculations.
The projection considers all liabilities to be uninsured and will be present during the defined term.
In the Life Insurance projection, all investments account are liquidated and grouped under Estate Assets.
The Disability Index projection is for the General public who which to rapidly access his personal situation in case of disability. For a thorough analysis, you need to consult a financial service professional.
The defined term is determined as follow: the number of years between the current age and the retirement age specified (maximum 65 years old).
The projection goal is to assess the client's needs in terms of disability insurance coverage.
In case of disability, the net income to be replace is set at 66.66%.
The projection consider the monthly expenses and the maximum monthly amount of insured employment income, then uses the lesser of the two amounts to determine if the current insurance coverage is sufficient to meet the client's monthly income need during the period of disability.