# K How much to save in an RRSP

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```					                      RRSP or RESP calculation
RRSP
Principle                       2000      Age now                     43
Interest rate                     6%      Age at retirement           65
Time years                         22
Value at retirement      \$     7,207

RESP
Principle                \$     8,000      Age now                      4
Age entering post
secondary
Interest rate                     8%      education                   18
Time in years                      14
Government subsidy       \$     1,600
Value entering school    \$    28,197

Future Value of money equals the       Mortgage or RESP
principle multiplied by one plus the   If you are carrying a mortgage. There are some
interest rate to the power of time     convincing arguments in favour of paying it off before
saving for education. The decision is based on interest
Fv = (1+ i)t                           rates.
is based on interest
RRSP retirement calculator
What you will receive from current public plans

Federal government                                              \$     5,661
Provincial government                                           \$     7,236
Other pension                                                   \$     4,000
Rental income                                                   \$    12,000
Other income                                                    \$     2,000
Total                                                           \$    30,897

How much do you want your income to be at age 65?

Age now                                                                   43
Age at retirement                                                         65
Years to retirement                                                       22
Expected interest rate                                                   5%
Indicate your gross income before taxes                         \$    78,000

Indicate the percentage of this income you want at retirement          50%

You will need a gross income of                                 \$    39,000

Amount provided by public funds                                 \$    12,897

Amount provided by other funds                                  \$    18,000

Additional amount you need to provide for yourself              \$     8,103

How much saving do you have in a RRSP?                          \$    40,000

Value at retirement                                             \$   117,010

The savings will provide this amount income per year            \$     7,723

How much will you need to save in order to reach your required goal?

Additional amount you need to generate at retirement            \$     8,103

Income provided by your current savings                         \$     7,723

Savings required per year                                       \$      181
Savings required per month                                      \$       15

These calculations are based on a 6% return and an
inflation rate of 2.5%
Based on information available 2005
All values are rounded to the dollar

It also assumes that you will live off the interest / increase
of the investment without reducing the principle.
This calculation is for mortals willing to reduce their
holdings as they age

RRSP are tax deferrals
Currently RRSPs transfer to a surviving spouse
Once the second partner dies the RRSP is considered income earned in that year.
Surviving children will split their RRSP inheritance with the government.
Age at Death
77

Number of years
12

Withdrawal per year
\$             9,751

Retirement income
\$            48,371
Mortgage Amortization
Inputs                                                               Key Figures
Loan principal amount                 \$71,000.00                     Annual loan payments
Annual interest rate                  4.250%                         Monthly payments
Loan period in years                  8                              Interest in first calendar year
Base year of loan                     2005                           Interest over term of loan
Base month of loan                    jan                            Sum of all payments

Payments in First 12 Months
Beginning                                             Cumulative
Year    Month                        Payment       Principal    Interest
Balance                                               Principal
2005    Jan               \$71,000.00       \$873.72      \$622.26      \$251.46        \$622.26
Feb               \$70,377.74       \$873.72      \$624.47      \$249.25      \$1,246.73
Mar               \$69,753.27       \$873.72      \$626.68      \$247.04      \$1,873.41
Apr               \$69,126.59       \$873.72      \$628.90      \$244.82      \$2,502.31
May               \$68,497.69       \$873.72      \$631.12      \$242.60      \$3,133.43
Jun               \$67,866.57       \$873.72      \$633.36      \$240.36      \$3,766.79
Jul               \$67,233.21       \$873.72      \$635.60      \$238.12      \$4,402.39
Aug               \$66,597.61       \$873.72      \$637.85      \$235.87      \$5,040.24
Sep               \$65,959.76       \$873.72      \$640.11      \$233.61      \$5,680.35
Oct               \$65,319.65       \$873.72      \$642.38      \$231.34      \$6,322.73
Nov               \$64,677.27       \$873.72      \$644.65      \$229.07      \$6,967.38
Dec               \$64,032.62       \$873.72      \$646.94      \$226.78      \$7,614.32

Yearly Schedule of Balances and Payments
Beginning                                                  Cumulative Cumulative
Year                    Payment       Principal        Interest
Balance                                                    Principal     Interest
2006         \$63,385.68    \$10,484.64        \$7,944.30     \$2,540.34    \$15,558.62       \$5,410.66
2007         \$55,441.38    \$10,484.64        \$8,288.60     \$2,196.04    \$23,847.22       \$7,606.70
2008         \$47,152.78    \$10,484.64        \$8,647.81     \$1,836.83    \$32,495.03       \$9,443.53
2009         \$38,504.97    \$10,484.64        \$9,022.59     \$1,462.05    \$41,517.62      \$10,905.58
2010         \$29,482.38    \$10,484.64        \$9,413.60     \$1,071.04    \$50,931.22      \$11,976.62
2011         \$20,068.78    \$10,484.64        \$9,821.57       \$663.07    \$60,752.79      \$12,639.69
2012         \$10,247.21    \$10,484.64       \$10,247.21       \$237.43    \$71,000.00      \$12,877.12
ments                     \$10,484.64
ts                           \$873.72
alendar year               \$2,870.32
m of loan                 \$12,877.12
ents                      \$83,877.12

Cumulative Ending
Interest     Balance
\$251.46     \$70,377.74
\$500.71     \$69,753.27
\$747.75     \$69,126.59
\$992.57     \$68,497.69
\$1,235.17     \$67,866.57
\$1,475.53     \$67,233.21
\$1,713.65     \$66,597.61
\$1,949.52     \$65,959.76
\$2,183.13     \$65,319.65
\$2,414.47     \$64,677.27
\$2,643.54     \$64,032.62
\$2,870.32     \$63,385.68

Ending
Balance
\$55,441.38
\$47,152.78
\$38,504.97
\$29,482.38
\$20,068.78
\$10,247.21
\$0.00
DO NOT ERASE

1.00    Jan    1.00    Jan
2.00    Feb    2.00    Feb
3.00    Mar    3.00    Mar
4.00    Apr    4.00    Apr
5.00    May    5.00    May
6.00    Jun    6.00    Jun
7.00    Jul    7.00    Jul
8.00    Aug    8.00    Aug
9.00    Sep    9.00    Sep
10.00   Oct    10.00   Oct
11.00   Nov    11.00   Nov
12.00   Dec    12.00   Dec
24      72.00
36.00   60.00
48.00   48.00
60.00   36.00   Months      96.00
72.00   24.00   Base Year 2005
84.00   12.00   Years       8.00
96.00   0.00    Last Year 2012
96.00   0.00                Yr
Mos in Last 12.00
96.00   0.00
96.00   0.00
96.00   0.00
96.00   0.00
96.00   0.00
96.00   0.00
96.00   0.00
96.00   0.00
96.00   0.00
96.00   0.00
96.00   0.00
96.00   0.00
96.00   0.00
96.00   0.00
96.00   0.00
96.00   0.00
96.00   0.00
96.00   0.00
96.00   0.00
96.00   0.00
96.00   0.00
96.00   0.00

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