Couple With $1,000,000

Clara and Clancy Claremont are 55 years old and on target to have a million dollars saved when they reach 65. Their parents lived into their 80s so they figure 90 is a nice age to aspire to. And they’re hoping to be able to spend $60,000 in today’s dollars, adjusted for inflation every year, when retired.

So I’ve added those details into feathernest, and without changing any of the other default settings we get a result that looks like this:

So far, the Claremonts are running out of money before reaching their target age. But that’s to be expected because all we’ve done so far is enter a few basic details. There’s more the hypothetical Claremonts can do to make this plan really tailored to their preferences and circumstances.

Personalizing The Plan

In Custom Settings , the default numbers feathernest starts with are actually pretty close, so we’re not going to mess with those — at least not just yet.

In Additional Income, we want to make sure we’re including things like their CPP, OAS, and anything else that might be available to them in retirement. In the Claremonts' case, they have a home they could sell if they really had to, but for now let’s see what CPP and OAS do for them and take it from there.

They’ll both get full OAS, which ten years from now will be around $11k a year each, and half the max for CPP, which would also be around $11k a year each, so let’s plug those numbers into feathernest and see what it does to their plan.

What a difference factoring in our hard-earned benefits can make. Based on these results, they’ll have more money leftover than they started with, which might be great if the Claremonts want to leave behind a big inheritance or charitable donations. But let’s first make sure they make the most of the retirement they worked so hard to enjoy.

Exploring More Options

They’ve got some fun options now. They can either try increasing the amount they can spend in retirement, retiring sooner, planing for living longer, or any mix of the three.

Or they can really try putting their plan to the test by making some more conservative adjustments to their plan, play with some what-if scenarios and see how their savings fare.

The two we’ll try here first are targeting a more conservative return on their investments, and a higher inflation rate.

Let’s see what happens if they target 5% rather than 7% for the return on their retirement savings investments.

Still holding steady. So now let’s see if inflation is higher than what the Bank of Canada typically targets, and set it to 3%.

Ok, that had a significant impact, but with a roughly 95% success rate, the Claremonts are still feeling confident in their plan.

Spending More

So now they want to see what happens if they upped their spending to $65k a year in today’s dollars, adjusted for inflation over the course of their retirement — while keeping the conservative changes they’ve made to their plan in place.

Remember, we're keeping it simple for ourselves by telling feathernest how much we want to spend each year in retirement, in today's dollars. feathernest factors in the annual inflation rate and applies our tax rate to figure out the actual amount to withdraw each year. The Claremonts aren't doing any complicated math here, just adding $5k more in today's dollars to their annual spending goal.

Let’s see how that goes.

Now they’re making it to the end less than half the time, but this is after taking a considerably more conservative view on their rate of return. So they decide to split the difference, set their rate of return to 6%, and run the numbers again.

Selling The Home

That looks a lot better to them, but they’d like to see their success rate go over 80%, so let’s find out what happens if they sold their home at age 85. It’s worth $500k today, so they’re taking the conservative view of a 2% value increase per year for the next 30 years, giving them a $900k boost at age 85.

With all their additional income factored into their plan, we should see a much stronger outcome.

Back on top with room to spare.

More Room To Explore

There’s more the Claremonts can do to test out scenarios and customize their plan, like what if they retired earlier, spent more, or maybe even saved less? It’s totally up to them how they want to explore the possibilities of their retirement spending plan in feathernest.

Easy to use, versatile and powerful, at a price anyone can afford, feathernest really is the best retirement spending planner you’ll ever use. Give it a try today and see for yourself.