Retirement Planning: Testing the TD Retirement Savings Calculator

Posted on 2014 04 07 by BetCrooks

As I mentioned in Testing the Canadian Government Retirement Income Calculator, I’ve been curious about how close we are to having enough saved for retirement. Could we step down from high-paying but highly stressful jobs without ruining our retirement? What if we had no choice and the next round of layoffs put us in “early retirement?” The Service Canada calculator said we’d be ok with what we have saved already IF we could earn enough between now and 65 to pay all of our bills during that period. What about other estimates though? The next online program I reviewed and used to test our finances was the TD Retirement Savings Calculator.

Will TD be Phoning Me Trying to Sell Me High Expense Mutual Funds If I Use Their Calculator?

A tiny bit to my surprise, TD doesn’t try to capture any personal information about who is using their calculator. They don’t specifically ask you for your name or telephone number or who you bank with. And it’s been a week since I used the calculator and no strange messages have appeared in my email or voicemail, so I guess I’m safe.

What You’ll Need to Know Before Using the TD Retirement Savings Calculator

Your age
When you plan to retire
How long you expect to live in retirement (this is a value that can be increased on the final screen)
What income you require in retirement
This is a number most of these calculators want you to know. I took a crack at calculating our requirements by back-calculating our spending from our bank accounts as I mentioned in another article.
Your current RRSP savings, including your personal RRSP/s, any spousal RRSP/s where you received the money from your spouse, any defined contribution pension plans or group RRSPs from work
How much you plan to contribute to your RRSPs both personal and work, or what you expect to have contributed to your spousal by your partner
Your current TFSA and non-registered savings for retirement (note you shouldn’t include money your saving for other things like a new car, home upgrades, your children’s education, a vacation etc.)
How much you plan to contribute to these other types of retirement savings.
What you estimate your annual rate of return will be for your investments including your RRSPs, TFSA, work RRSP or defined contribution plan, and non-registered savings. This is supposed to be just one number for everything.

My Review of the TD Retirement Savings Calculator

Overall I didn’t particularly like this calculator. It doesn’t clearly state its assumptions and it doesn’t clearly define what you should type in to the program.

The program doesn’t state whether the income you require in retirement should be entered in before tax or after tax values. Judging by how little it said we needed to retire, I think you should enter the amount you need before income tax to get a realistic result.

It doesn’t tell you what rate of income tax it is using, if any.

It doesn’t tell you what rate of inflation it is using, if any.

It doesn’t tell you whether it is assuming you will get CPP and OAS and if so at what rate. It doesn’t make it clear whether you should enter income from a defined benefit pension plan in the “If you expect to receive additional income after you retire, please enter it:” field. I suspect you may be supposed to enter all of these types of pensions in this field but it would be nice if it would say so clearly.

It doesn’t seem likely that it is handling taxes properly. For example, it wants you to report how much you have saved for retirement in non-registered investments and in TFSAs in one total. This isn’t realistic as you could have a stock worth $20 000 that you bought for $10 000. If it’s in the TFSA, when you withdraw the $20 000 you pay no tax. If it’s in a non-registered investment account, when you withdraw it, you have to include the capital gain (currently 50% of $10 000) on your income tax for that year and possibly pay tax on that capital gain, reducing the value of your $20 000 withdrawal.

It doesn’t allow you to select a different rate of return for your RRSP, defined contribution or group RRSP, TFSA, and non-registered investment accounts. You have to come up with some sort of weighted average yourself for what you expect to make across all of your accounts. (I made it easy on myself by choosing the lowest possible percentage. But if you don’t have much saved yet that could be a very depressing, though possibly realistic, way to estimate your retirement!)

It doesn’t allow you to report a different source of other income during different years of retirement, like the Service Canada calculator. This makes it difficult to correctly enter the situation where you might receive a “bridge benefit” from 55-65 which then ceases when you begin to receive CPP and OAS, or when you might plan to work part time from 65-70 but then stop working entirely.

I also didn’t like the fact that it limited me to living 35 years after retiring at age 65.

Estimating Your Canada Pension Plan Payments and OAS Payments

I discussed how to estimate CPP and OAS payment briefly in the review of the Service Canada Retirement Income calculator.

What Assumptions Does the TD Retirement Savings Calculator Use?

I wish I knew! They don’t clearly list their assumptions.

How to Use the TD Retirement Savings Calculator

Go to: http://retirement-calculator.tdcanadatrust.com/
Click on the Get Started button.

The About You section

The Tell us about yourself: screen

In the appropriate fields, type in your
- age
- age at retirement
- annual income before taxes
  (or select monthly from the drop-down list and type your monthly gross income.)
Click on the Next button.

The Retirement Plan section

In the appropriate fields, type in
- how many years of retirement you are saving for
  (The maximum is 35.)
- what income you will want (monthly or annually) in retirement
  I ended up entering our before tax income required not including CPP and OAS.
- what extra income you expect to receive in retirement such as rental or employment income
Click on the Next button.

The Savings and Investments Section

In the appropriate fields, type in
- how much you have saved in your RRSP accounts so far
  According to their What should I include? include the amount saved in any RRSPs, spousal RRSPs (where you are the spouse who received the RRSP), LIRAs, defined contribution pension plans, and Group/Work RRSPs.
- how much you contribute regularly to your RRSPs including your work ones, either monthly or annually
- how much you have saved for retirement in TFSAs and non-registered investment accounts
- how much you contribute regularly to these other savings accounts, either monthly or annually
Click on the Next button.

The Rate of Return Section

In the % estimated annual return field, type in how much you expect to earn on your investments annually.
The lowest you can select is 1%. The highest is 10%.
Click on the Results button.

The Results Section
The program will tell you what your retirement savings goal is, based on your expected retirement income needs, current savings, future contributions to savings, and estimated longevity in retirement.

It will also tell you what your projected total savings will be.

If applicable, it will tell you how much you still need to save.

Don’t just close your session yet, though! You can now adjust some values more than you were permitted on the original screens.

There are four expandable lists:

How much I save
How much I spend
How long I’m in retirement
How quickly my savings grow

These allow you to change some of the information you entered without going back through all of the screens.

What Did TD Say About Our Joint Retirement Income?

Well it depends. If we put in the income we needed in retirement (after OAS and CPP) and we assumed it was an after-tax number, it said we are over-funded for retirement, just using our RRSP and work DC pension savings.

If, however, we put in a larger income needed in retirement in case the program expects a before-tax number, it said we would need to use our TFSAs and some of our non-registered savings to be funded for retirement.

So it agreed with the Service Canada calculator that said if we stopped saving for retirement now, and made sure we didn’t incur any debts between now and retirement, we’d be ok in retirement.

But do I trust it?

No. They don’t state many very important assumptions. I want another opinion!

I’d better test the same numbers with some other calculators. And although it’s nice of them to offer, I don’t think I’ll call TD to discuss how to reach our retirement savings goal.
In the meantime, we’ll keep saving.

Related Reading

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Have you ever checked whether you’re on track for retirement? Or do you only need to look at your credit card statements to know that you’re not? Please share your views with a comment.

How Do I Group InvestorLine Accounts Under a User ID and Whose Accounts Can I Group?

Posted on 2014 02 20 by BetCrooks

I’ve been on a mission over the last three years to re-organize our finances. This included opening some online brokerage accounts and moving funds in from all the various banks, trust companies and government offices where they’d been mouldering. I am by no means an expert on brokerages and I am still learning new things each day as I work. Recently, I learned, somewhat to my surprise, that it is possible to group BMO InvestorLine accounts under one User ID even if they don’t all belong to one person.

Why Do You Want to Group InvestorLine Accounts Under a User ID?

For the reasons why grouping accounts is a good idea, please see Why You Should Group Your BMO InvestorLine Accounts Under a Single User ID.

The key point:

If you can group accounts with $250 000 or more, you will get a different type of trading quote and you will get “exclusive access to a dedicated service team.”

Which Accounts Can I Group Under a BMO InvestorLine User ID to Qualify for the 5 Star Trader Program and Level II quotes?

If you’re like me, you can group your

RRSP
LIRA
TFSA
RESP
spousal RRSP
unregistered regular trading account

and still not get close to $250 000 in assets.

That left me wondering, is it possible to add accounts belonging to anyone else to my User ID?

Will I Be Able to See the Portfolio Details for Each Account I Group?

While I was wondering whether I could group other people’s accounts under my User ID, I also started wondering whether doing so would let me see

their total investments,
their portfolios and
their transaction history.

After all, I can see all of those things for my own accounts which are grouped under one User ID.

I knew it would NOT allow me to trade on their accounts. You need a trading password to execute a trade at BMO InvestorLine and it is different from your sign in password.

So now I have three questions to resolve:

Can I add another person’s accounts to my InvestorLine User ID?
Do they need to sign a form authorizing my access to their account information?
Who would let me see everything in their account, every asset they hold and what they’ve been doing?

I can think of one very kind man who might let me peek into his portfolio. Admittedly if I do, he will lean over my shoulder and gloat at how much better his returns are than mine, but still, no pain no gain, right?

Now to check InvestorLine’s rules.
Well at
https://www.bmoinvestorline.com/home/popups/user-id they say you can consolidate accounts under one User ID if you own them or “manage accounts for others.”
And at
http://www.bmoinvestorline.com/home/popups/5-star-program-terms-conditions
It says that the accounts cannot be “Investment Club” or “Partnership” accounts.

Whose Accounts Can be Grouped Under One InvestorLine User ID?

I wrote InvestorLine to ask this question using their secure email MyLink.

Their response was:
I can add anyone’s accounts to my User ID if I know the account numbers and the account sign in passwords.

Wow. That’s almost scary.

So I can add

my husband’s account/s
my parents’ account/s
my aunts’, uncles’, nieces’, nephews’, sister’s, brothers’, cousins’ and grandchildrens’ account/s
my friends’ account/s

If they change their sign in password, then I will also have to update their sign in password under my User ID or their account will be removed from the User ID.

Will I Be Able to See the Portfolio and Holdings for Any Accounts I Link to my InvestorLine User ID?

Once I linked someone else’s account to my User ID, I signed in using my User ID to see what I could see.

I could look at:

their account balance
their holdings
their transaction history

Eeps! You’d better make this part very clear to any friends or relatives BEFORE you ask them to link their account to your User ID.

Note: I can’t trade on their account because I don’t have their trading password.

Also note: They cannot see MY account information unless I add my account to their User ID. This might be handy if you want to add your children or parents to your User ID but you are not willing to reciprocate by opening your finances for review and discussion.

Do I Need Written Permission from Another Person Before I Can Add Their Account to my InvestorLine User ID?

According to the MyLink InvestorLine representative “There is no form required to be completed for this purpose.”

That also is a wee bit disturbing. I guess it’s a good reminder to keep your sign in password secure from prying eyes!

Before You Start to Create your InvestorLine User ID

You may wish to think ahead about

What 8-20 letters and numbers you want to use for your User ID. You may not use special characters such as &.
What unique challenge question that you type yourself that you would like to use to help confirm your identity. It has a maximum length of 60 characters.

To create a BMO InvestorLine User ID to Group Accounts

Sign in to one of your InvestorLine accounts.
From the Account Services tab, under the heading Account Profile, click on Create User ID.

On the screen: Step 1 of 3: Choose a User ID and Password

In the User ID: field, type the alphanumeric id you want to use to sign on to your group of accounts.
In the Password: field, type a password to use when signing in to your accounts. This can be different from the Password used to sign in to a single account.
In the Confirm Password: field, type the password again.
From the drop-down list in the Challenge Question 1: field, select a security question.
In the Response 1: field, type the answer.
From the drop-down list in the Challenge Question 2: field, select a security question.
In the Response 2: field, type the answer.
In the Challenge Question 3: field, type your own security question.
In the Response 3: field, type the answer.
Click on the Continue button.

OK, I made every possible error!

Your User ID must start with a letter.
Your responses must be at least 6 characters in length.

Now it accepts them. Phew.

On the Step 2 or 3: Link Accounts to Your User ID screen

In the Account Number field, your current account number is listed. To add this account to the User ID you must input the existing password for that account (not the new password for the User ID).
In the Account Password column, type the password for signing into the numbered account.
If desired, in the Account Nickname (optional) column, type a nickname for that specific account.
If desired, on the next line, type the values in the columns
- Account Number
- Account Password, and
- Account Nickname (optional)
for your other InvestorLine accounts.
Click on the Add More Accounts button if you have more than 5 accounts to link up.
Once complete, click on the Continue button.

On the Step 3 of 3: Provide Contact Information for your User ID screen

Review the information in the Email Address: field and make sure it is correct.
If that is the address at which you wish to receive your InvestorLine email, type it again in the Confirm Email Address: field.
In the How you would like to be greeted when we correspond with you: field, type your favourite. For example, you could try
Supreme Grand Emperor Smith
I’m not sure if that will work or not. Guess I’ll have to update my profile and see!
Rats. You can’t use that particular title as there is a character length limit of 20.
Click on the Continue button.

On the Register your User ID for an opportunity to enjoy our 5 Star program and $9.95 Flat fee commissions – Optional screen

If you wish, click to select the radio button beside Yes to have the User ID evaluated for the 5 star program.
Click on the Continue button.
If you select Yes, look at the linked accounts summary to ensure it is correct.
Click on the Continue button.

To check if all of the accounts for the User ID are set up to be evaluated for the 5 Star Program

Click on the $9.95 Pricing & 5 Star Program tab.
Under the Receive Program Benefits tab, the account should be listed as Yes. If not, click on the Edit button to update the setting.

When Will I Start to Receive the 5 Star Program Benefits?

If the combined holdings in all of the accounts under the User ID add up to at least $250 000, the accounts will become eligible for the 5 Star Program benefits. User IDs are evaluated 4 times a year, at the end of

March,
June,
September and
December.

The benefits should be available the day after the evaluation date.

So I guess I won’t know till April Fool’s Day if this worked. How appropriate!