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Determining a client's current lifestyle

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OK... you've entered all the 'easy' stuff (salary, existing RRSP/nonreg capital, loans, insurance premiums, etc) and now it's time to ask your client what his ATI/lifestyle is, i.e. how much he spent on beer, groceries and lotto tickets last year. He hasn't got a clue. What to do?

You could (painstakingly) get him to itemize what he spends each year, or do the following.....

Set the 'start smoothing at age' (in the environment frame) ahead one year. (i.e. if he is 50, set his 'start smoothing at age' to 51.

Next, in the first year only, enter what his actual RSP contribution from last year was plus any nonreg he may have contributed (negative amts if he took money out). Do a quick smooth. Dont worry about the result... all you want to look at is the first year..

Now... look at the first column/cell in the result grid. This was his 'lifestyle/net income' for last year. This number will be what you will enter in the first column in the data entry grid.

IMPORTANT!!!! This assumes that his salary, etc, hasn't changed noticeably from last year. How far you copy this number down the first column depends how long he plans to sustain this lifestyle and (especially) assumes his salary will be continuing over this time span.

Finally, set the 'start smoothing at age' back to his current age, and amortize/smooth as normal. Simple.

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