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Abigail and Ted Sayers

Ted and Abigail Sayers have been common law partners for ten years. They came to Canada from the United States on March 1, 2007 when Abigail was offered a job with the Canadian diplomatic service. They have one son, George. The family lives at 6547 Aston Martin Mews in Mississauga, Ontario L5N 7P6.

The family’s birthdates are:

Ted, April 20, 1977

Abigail: June 15, 1977

George: October 30, 2016                                                    

Ted and Abigail have provided their most recent Notice of Assessments to you that show that Ted has $23,000 in RRSP carryforward room, while Abigail has $5,000 in RRSP carryforward room. Ted has TFSA carryforward room in the amount of $73,000, while Abigail has $88,000 in TFSA carryforward.  

The couple have three goals:

First, they would like to retire at age 60. They would like to continue living the same lifestyle as they are now. They would also like to have an extra $14532 (in today’s dollars) each year for travel. 

Second, the couple would like to fund 100% of George’s four-year post-secondary education. The total cost of the education is expected to be $17681 (in today’s dollars) per year and education costs are expected to continue rising at an annual pace of 5%. George is expected to begin his education when he turns 17.

Third, the couple would like to accumulate $100,000 in today’s dollars to start a scholarship fund for students who want to spend a summer abroad for cultural studies. Given Abigail’s connections with the diplomatic corps in various countries, she believes that she can raise additional funds to facilitate a student exchange. The couple intend to spend launch the fund in their retirement, but would like to accumulate the funds by the time they are 55 so that they can raise matching contributions from donors.  

Ted earns a gross annual salary of $148329 as the CFO for Amazing Software Co. and generally gets cost of living adjustments each year to keep up with inflation. He gets paid biweekly. Abigail earns $126586 per year, also indexed to inflation. She receives her pay bi-weekly. 

The couple currently have $25,000 in a joint chequing account. This account earns no interest. They also have joint savings account with a $50,000 balance that earns 1% interest and is earmarked for emergencies. 

The couple lease a car worth $45,000 and pay $500 per month for the car. They prefer to lease rather than buy cars because they appreciate that the car is always under warranty.

Ted has a TFSA that the couple uses to save money for George’s education. It currently has $15,000 in cash in it. They contribute $200 per month to it and earn 2% interest.

Ted has a group RRSP to which he contributes 6% of his salary to each year, through payroll deductions. His company will match 100% of his contribution to a maximum of 9% of his salary. Ted’s group RRSP has $150,000 currently invested at 4% in balanced fund. 

Please note that there is some missing information in the Sayers case that I have added in bold.

Abigail joined her pension plan on January 2, 2008. She will be eligible to receive an unreduced, non-indexed pension when the sum of her age and years of service equal 85. 
The normal retirement age is 65. Her pension benefit accrues at 1.5% of her income up to the YMPE plus 1.8% above the YMPE to a maximum of 50% of the last five years of her salary. For every year that the pension is taken early, there is a 5% penalty. 
Abigail contributes $10,000 per year to her pension. Ted will assume 60% of the pension in the event of Abigail’s premature death.

The couple own their home jointly, which is currently valued at $1.2 million. Their only debt is their mortgage. They bought their house for $850,000 in November 2010 using a $450,000 mortgage. Their current five-year mortgage rate of 3.50% is fixed until September 2024, at which time they will choose a new term and rate when they renew their mortgage contract. They currently owe $350,000 on their mortgage and pay monthly payments of $2,500. 

The couple have the following expenses each month:

· Housing costs, including utilities of $1,400.

· Food and housing supplies of $1,000.

· Transportation expenses of $1,500.

· CableTV, internet, and cell phones of $500.

· Extra-curricular activities for George of $500 (payable to June 30, 2034).

· Social and Entertainment expenses of $1,000

· Car lease $500

The couple also have the following expenses each year:

· Property taxes of $8,000

· Travel expenses of $10,000

Each partner has a will that designates the other as the executor and sole beneficiary of all assets, except for $100,000, indexed for inflation, that will fund a trust for the care of George in the event that the couple pass while George is a minor. Their wills also appoint Abigail’s sister as the guardian for George and the trustee of the trust. 
Their wills were last updated when George was born. 

The couple’s answers to their investment questionnaire are posted separately. They expect to pay a 2% non-tax deductible annual fee for money management.