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Retirement Goal Plan

Tina and Will Collins, both age $40$ have come to see you, their financial planner to develop a retirement plan. Tina works full time at an Accounting Firm earning $$98,000$ a year after taxes and deductions and Will works full time as a Software Engineer earning $$129,000$ after taxes and deductions. The Collin$$s have one child, Rachel, who is $8$ years old. The Collin$$s have not yet put any savings aside for Rachel$$s post secondary education but would like to start.

In addition, The Collin$$s live in a townhouse in Mississauga that is worth $$1$ million and has $$210,000$ remaining on the mortgage which is on track to be paid off in $11$ years. The Collin$$s also share a four year old Volvo SUV that is valued at $$38,000$ and has no existing loan balance.

Regarding retirement, the couple would like to retire at $65$ and want to ensure they are on track towards a comfortable retirement which would require the couple to have $1\mathrm{.}4$ million, combined in savings at age $65.$ Tina and Will were both born in Toronto and have always resided in Canada. In addition, both Tina and Will have been employed full time since graduating from College at age $21$ with the exception of Tina taking a year off of work during her maternity leave.

Please keep in mind the following:

The chequing Account balance is seen by the couple as an emergency fund, and therefore they don$$t want it included in calculations for Retirement Income.

The Collin$$s have an abundance of questions for you and have requested you to determine if they$$re on the right path towards achieving their retirement goal. During the meeting, the couple has provided you with the following information that better captures their current financial situation.

Monthly Expenses $($Joint$)$:

Mortgage Payment: $$1500$

Home maintenance: $$300$

Utilities: $$280$

Property Taxes $$480$

Auto Insurance: $$160$

Gas: $$360$

Food: $$1400$

Clothing: $$380$

Internet$/$Cell phone bills: $$260$

Dining out & Entertainment: $$560$

Vacations $$1,600$

Monthly Contributions to Registered Savings Accounts:

Tina and Will each contribute $$200$ per month their RRSP accounts.

Assets $($Joint$)$

Principal Residence: $$1,000,000$

SUV: $$38,000$

Chequing Account: $$20,000$

Savings Account: $($earning $3\%$ per year compounded annually$)$: $$180,000$

Debt $($Joint$)$

Mortgage: $$210,000$

Tina$$s Assets

TFSA: $$34,000($earning $3\%$ per year compounded annually$)$

RRSP $$80,000($earning $3\%$ per year compounded annually$)$

Will$$s Assets:

TFSA: $$56,000($earning $3\%$ per year compounded annually$)$

RRSP: $$112,000($earning $3\%$ per year, compounded annually$)\mathrm{.}2.$ The Collin$$s are wondering what RRSP maturity option would provide them with flexibility and the ability to maintain control over how their funds are invested at retirement. Provide the Collin$$s with an overview on which RRSP maturity option would best fit their needs and why.

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