A Sample Assessment


Consider Bill and Jane Smith.  Bill, a manager earning $49,000 per year, is 54 and Jane, his wife is 52.  Now that their two grown children have left the home Jane has part-time employment that brings in $10,700 per year.

Bill and Jane have three years of mortgage payments remaining on their home, but own their 4 1/2 year old vehicle.  In addition to a defined benefit pension benefit forecast to provide $20,300 per year at age 65, Bill has accumulated $52,000 in his RRSP.  Jane has $35,000 in her RRSP from employment before their children.  Collectively Bill and Jane also have $70,500 of non-registered savings, about 60% in bonds and 40% invested in the market.  Based on his working experience Bill is expected to receive 91% of the maximum CPP at age 65, while Jane is estimated to receive 32% of the maximum at her age 65.

Excluding income taxes, CPP and EI premiums 2009 expenses are expected to total $48,760.  This level will drop $7,500 in three years when the mortgage is paid off.

Bill and Jane are questioning whether their savings and pensions will be sufficient if they stop working before they respectively turn age 65.  However, they really don't know, particularly in light of their plans to increase the amount they spend on vacations after they retire.

In short Bill and Jane would like to know whether they might be able to retire before age 65.


Bill and Jane's Retirement Financial Assessment



  • employment income
  • assumptions as to investment earnings
  • expenses, and assumptions as to future expenses
  • an inflation assumption
  • forecasted CPP benefits
  • OAS benefits at age 65
  • forecasted pension plan benefits for Bill, and
  • current tax rates, with assumed tax bracket changes

I have forecasted, year by year until 2046 (Jane's age 90)

  • income
  • expenses, and
  • resulting assets

The following Excel workbook contains a number of spreadsheets that are the basis of the analysis for Bill and Jane (I've deleted those spreadsheets specific to Jane in order to save space).  Other than the inventory of current assets all data is provided year by year to Jane's age 90, or 2046.  Included are

  • an inventory of current assets of both Bill and Jane, split between guarantees and equities
  • Bill's assets, including investment income
  • total assets for Bill and Jane
  • OAS benefits, including clawbacks if applicable
  • taxable income, including the impact of the Tax Free Savings Account (TFSA)
  • CPP details and forecast, including historical contributions
  • income by source - employment, pension, CPP, OAS, investment income, and RRSP/RRIF withdrawals
  • tax, both federal and provincial
  • expenses, by category with inflation
  • net income and the annual impact on assets, and
  • graphs of income, expenses, assets and the annual change in assets
Sample Assessment.xls Sample Assessment.xls
Size : 0.81 Kb
Type : xls


The Assessment


Based on the assumptions and inputs provided by Bill and Jane it appears they will be able to retire in nine years, at ages 63 and 61 respectively.

Assets are forecasted to grow while they continue to work, from their current level of $157,500 until reaching nearly $250,000 in 2017.  After retirement their assets are forecasted to decline to just over $80,000 in 2032, after which they are expected to increase as expense levels are assumed to diminish.  In addition Bill and Jane have the equity of their home.

Now back to Bill and Jane's question as to whether they might be able to retire prior to age 65.  The Retirement Financial Assessment forecasts that Bill and Jane can expect to be able to retire somewhat earlier than their age 65.

However a lot will happen in the next nine years.  The assessment is not a guarantee in that reality will vary from the assumptions, and as a result experience will vary from this forecast.  The assessment is a snapshot as of this point in time, based on the assumptions used, and will vary as reality varies.