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Goal Based Computing

The Burger Quotient

Tax Accuracy

Reverse Tax Engine

Live Rich - Die Broke

Done your T-zero yet?


"Doing the math".... Tax, accuracy and financial planning.

Think about this carefully..... What is it that is so arbitrary about the rules governing financial planning?

The taxation math is known and fixed.... all tax returns are crunched through a single big computer in Ottawa, they had better agree! We certainly don't see comparative studies of the accuracy of various T1 programs.

The laws of compound interest and inflation aren't subject to interpretation. The various RRIF/LIF/LRIF withdrawal rules, the algorithms which generate CPP, OAS, GIS, the RESP rules, etc.... these are all published and available to anyone. Why then should there be such a variety of financial planning S/W "solutions"?

If I were to go to a planner and pose the simplest problem....

"I earn $75,000, plan to work 8 more years, I have $200,000 in my RRSP and expect an inheritance of $150,000 in 6 years. My retirement goal is to achieve a $35,000 post retirement lifestyle. What must I do pre-retirement to achieve this? In other words how should I invest (move Reg and nonReg capital in & out of savings) and what will my pre-retirement lifestyle be... in order to exactly achieve this retirement goal.?"

Now, obviously, a few other parameters are needed... the interest/inflation rates, lifespan and estate goals ("do you want to just die broke or leave a certain estate?").... but once it calculates, you should expect a certain fixed "solution". Just like doing your tax return. Why not?, after all, the math rules are completely specified.

RRIFmetic solves this problem in 3 seconds! It is solved exactly; not using a 'shortfall/deficit/surplus'-type approximation. Once you experience the speed and accuracy of RRIFmetic, you will wonder where it has been all your life!

Now for the accuracy part.... Here is a line lifted directly from a RRIFmetic V2.5 projection. These amounts can be verifyied by dropping them into Quicktax. Examine the results! The program was asked to force out a net income of exactly $35000. It computed the RSP and nonReg withdrawals needed, based on the full T1 income tax formulation.

Remember, if you attempt to compare the tax calculation that RRIFmetic (2006) performs against a tax program.... RRIFmetic will be more accurate because it contains all the upcoming prov and fed tax rates and rules. Cantax/Quicktax etc are last year's tax rules. Also, remember that RRIFmetic indexes the brackets, they will be different.



1. RRIF withdrawal..............$16,302 (calculated)
2. nonReg withdrawal............$ 8,705 (calculated)
3. nonReg Growth................$ 2,959 (interest)
4. CPP..........................$10,136
5. OAS..........................$ 5,816
6. Loan Pmt.....................$ 1,187
7. Taxable Income...............$35,213 (add 1, 3, 4 and 5)
8. Tax payable..................$ 4,772 (calculated)


Net income......................$35000 (add lines 1,2,4 and 5 and subtract lines 6 & 8)


Please study these numbers carefully. This is the crux of the RRIFmetic math. The user asked for a $35000 after-tax income and the program computed exactly how he should move funds (out, in this case) from his savings in order to derive that net income. Remember, this was done in a 3 second compute. All the items (1-8) were calculated. Only the $35000 net income was input!. No shortfall/surplus/deficit stuff. We could have included salary, charitable donations, dividend income (the above numbers assumed non reg funds generated all interest, we could have broken this out into a dividend, capgains, interest mix), Universal Life, leveraging, real estate, deferred capital gain,..... this just scratches the surface.

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