RETIREMENT TACTICS

Doris’ situation is serious but fixable, Moran says. The job pays her $31,080 per year after taxes and medical and retirement benefits are deducted. She has only modest credit card debt. She has room to add $7,543 to her RRSP for 2018. She has enough cash in her savings account to cover that. The refund at her marginal rate would be 23 per cent or $1,725. That saving would help at present, especially if she needs to bridge a short period without work.

Doris’ has a choice of payout options for her company pension. She can choose the highest return, which will pay her $2,216 per month or $26,592 per year from 55 to 65, before CPP or OAS will start, and then $1,084 per month from 65 onward when she can have those benefits. She would be able to enhance her retirement income from 55 to 65 with $8,186 per year or $682 per month from her six figure RRSP for total pre-tax income of $2,898 per month. That will cover her expenses. Her total income from 55 to 65 would be $34,778 per year. After 12 per cent average tax, she would have about $2,550 to spend each month. That is about what she spends now.

From 65 onward the picture changes. Doris’ will see her pension drop to $13,008 per year but gain an estimated $8,166 per year from the Canada Pension Plan and $7,075 from Old Age Security. She could add $8,186 from her RRIF. The sum, $36,435 taxed at 12 per cent, would leave her with $2,670 to spend each month.