Question
In: Finance
Mark, 25, plans to put $6,500 per year in his RRSP until age 65. He plans...
Mark, 25, plans to put $6,500 per year in his RRSP until age 65. He plans to invest the money in an index fund that is expected to earn a rate of return of 8% per year. When he retires at 65, he will withdraw the money in one lump sum, and pay taxes at the rate of 45%. His friend recommends that he should put his money in a TFSA, invest in the same index fund, and will end up with more money at 65. His marginal tax rate before retirement is 30% throughout.
Answer:
- How much money will he have at 65, after taxes, if he invests in the RRSP?
- How much money will he have after taxes if he invests in the TFSA?
Solutions
jeff jeffy answered 2 years agoRelated Solutions
1. The 25 year old invests $2,000 a year until the age of 65 The 35...
1. The 25 year old invests $2,000 a year until the age of
65
The 35 year old invests $2,000 a year until the age of 65
We’ll assume they both get the same rate of return on their
dollar, in this example we’ll use 8%. Where will each of them be
when they reach the age of 65? What is the difference in the two
investment choice? Place the difference between the two $ amounts
as your final answer....
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work part-time until he turns 70.00. During these years of
part-time work, he will neither make deposits to nor take
withdrawals from his retirement account. Exactly one year after the
day he turns 70.0 when he fully retires, he will begin to make
annual withdrawals of $138,803.00 from his retirement account until
he turns 90.00. He he will make contributions to his retirement
account from his 26th birthday...
Derek plans to retire on his 65th birthday. However, he plans to work part-time until he...
Derek plans to retire on his 65th birthday. However, he plans to
work part-time until he turns 72.00. During these years of
part-time work, he will neither make deposits to nor take
withdrawals from his retirement account. Exactly one year after the
day he turns 72.0 when he fully retires, he will begin to make
annual withdrawals of $128,600.00 from his retirement account until
he turns 88.00. After this final withdrawal, he wants $1.02 million
remaining in his account. He...
Derek plans to retire on his 65th birthday. However, he plans towork part-time until he...
Derek plans to retire on his 65th birthday. However, he plans to
work part-time until he turns 71.00. During these years of
part-time work, he will neither make deposits to nor take
withdrawals from his retirement account. Exactly one year after the
day he turns 71.0 when he fully retires, he will wants to have
$2,612,520.00 in his retirement account. He he will make
contributions to his retirement account from his 26th birthday to
his 65th birthday. To reach his...
Derek plans to retire on his 65th birthday. However, he plans to work part-time until he...
Derek plans to retire on his 65th birthday. However, he plans to
work part-time until he turns 75.00. During these years of
part-time work, he will neither make deposits to nor take
withdrawals from his retirement account. Exactly one year after the
day he turns 75.0 when he fully retires, he will begin to make
annual withdrawals of $196,714.00 from his retirement account until
he turns 85.00. After this final withdrawal, he wants $1.64 million
remaining in his account. He...
Derek plans to retire on his 65th birthday. However, he plans to work part-time until he...
Derek plans to retire on his 65th birthday. However, he plans to
work part-time until he turns 72.00. During these years of
part-time work, he will neither make deposits to nor take
withdrawals from his retirement account. Exactly one year after the
day he turns 72.0 when he fully retires, he will begin to make
annual withdrawals of $117,576.00 from his retirement account until
he turns 93.00. He he will make contributions to his retirement
account from his 26th birthday...
Derek plans to retire on his 65th birthday. However, he plans to work part-time until he...
Derek plans to retire on his 65th birthday. However, he plans to
work part-time until he turns 71.00. During these years of
part-time work, he will neither make deposits to nor take
withdrawals from his retirement account. Exactly one year after the
day he turns 71.0 when he fully retires, he will begin to make
annual withdrawals of $161,481.00 from his retirement account until
he turns 87.00. He he will make contributions to his retirement
account from his 26th birthday...
Derek plans to retire on his 65th birthday. However, he plans to work part-time until he...
Derek plans to retire on his 65th birthday. However, he plans to
work part-time until he turns 73.00. During these years of
part-time work, he will neither make deposits to nor take
withdrawals from his retirement account. Exactly one year after the
day he turns 73.0 when he fully retires, he will begin to make
annual withdrawals of $191,169.00 from his retirement account until
he turns 89.00. After this final withdrawal, he wants $1.03 million
remaining in his account. He...
Derek plans to retire on his 65th birthday. However, he plans to work part-time until he...
Derek plans to retire on his 65th birthday. However, he plans to
work part-time until he turns 75.00. During these years of
part-time work, he will neither make deposits to nor take
withdrawals from his retirement account. Exactly one year after the
day he turns 75.0 when he fully retires, he will begin to make
annual withdrawals of $128,885.00 from his retirement account until
he turns 94.00. He he will make contributions to his retirement
account from his 26th birthday...
Derek plans to retire on his 65th birthday. However, he plans to work part-time until he...
Derek plans to retire on his 65th birthday. However, he plans to
work part-time until he turns 73.00. During these years of
part-time work, he will neither make deposits to nor take
withdrawals from his retirement account. Exactly one year after the
day he turns 73.0 when he fully retires, he will begin to make
annual withdrawals of $171,973.00 from his retirement account until
he turns 91.00. He he will make contributions to his retirement
account from his 26th birthday...
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