Question

In: Finance

Jake will retire next month and will have $619,209 in RegisteredRetirement Savings Plans (RRSP’s). He...

Jake will retire next month and will have $619,209 in Registered Retirement Savings Plans (RRSP’s). He wants a quarterly payment at the beginning of each quarter and expects to earn 10.8%, compounded quarterly in the equity and bond markets as an average. What quarterly amount would he be able to withdraw if his fund is expected to last 20 years?

Solutions

Expert Solution

Jake will have $619,209 at retirement in his RRSP account.

He will withdraw at the beginning of each quarter for the next 20 years.

Calculating the Quarterly withdrawal amount using PV of annuity due formula:-

Where, C= Periodic Withdrawal

r = Periodic Interest rate = 10.8%/4 = 2.70%

n= no of periods = 20 years*4 = 80

Present Value = $619,209

C = $18,471.20

So, quarterly amount would he be able to withdraw if his fund is expected to last 20 years is $18,471.20


Related Solutions

Demarcus wants to retire with 1 million in savings by the time he turns 65 he...
Demarcus wants to retire with 1 million in savings by the time he turns 65 he is currently 18 years old how much will he need to save each year assuming that he can get 12% annual return on his investment
DeMarcus wants to retire with​ $1 million in savings by the time he turns 70. He...
DeMarcus wants to retire with​ $1 million in savings by the time he turns 70. He is currently 18 years old. How much will he need to save each​ year, assuming he can get a 9​% annual return on his​ investments?
Derek plans to retire on his 65th birthday. However, he plans to work part-time until he...
Derek plans to retire on his 65th birthday. However, he plans to work part-time until he turns 70.00. During these years of part-time work, he will neither make deposits to nor take withdrawals from his retirement account. Exactly one year after the day he turns 70.0 when he fully retires, he will begin to make annual withdrawals of $138,803.00 from his retirement account until he turns 90.00. He he will make contributions to his retirement account from his 26th birthday...
Derek plans to retire on his 65th birthday. However, he plans to work part-time until he...
Derek plans to retire on his 65th birthday. However, he plans to work part-time until he turns 72.00. During these years of part-time work, he will neither make deposits to nor take withdrawals from his retirement account. Exactly one year after the day he turns 72.0 when he fully retires, he will begin to make annual withdrawals of $128,600.00 from his retirement account until he turns 88.00. After this final withdrawal, he wants $1.02 million remaining in his account. He...
Derek plans to retire on his 65th birthday. However, he plans towork part-time until he...
Derek plans to retire on his 65th birthday. However, he plans to work part-time until he turns 71.00. During these years of part-time work, he will neither make deposits to nor take withdrawals from his retirement account. Exactly one year after the day he turns 71.0 when he fully retires, he will wants to have $2,612,520.00 in his retirement account. He he will make contributions to his retirement account from his 26th birthday to his 65th birthday. To reach his...
Derek plans to retire on his 65th birthday. However, he plans to work part-time until he...
Derek plans to retire on his 65th birthday. However, he plans to work part-time until he turns 75.00. During these years of part-time work, he will neither make deposits to nor take withdrawals from his retirement account. Exactly one year after the day he turns 75.0 when he fully retires, he will begin to make annual withdrawals of $196,714.00 from his retirement account until he turns 85.00. After this final withdrawal, he wants $1.64 million remaining in his account. He...
Derek plans to retire on his 65th birthday. However, he plans to work part-time until he...
Derek plans to retire on his 65th birthday. However, he plans to work part-time until he turns 72.00. During these years of part-time work, he will neither make deposits to nor take withdrawals from his retirement account. Exactly one year after the day he turns 72.0 when he fully retires, he will begin to make annual withdrawals of $117,576.00 from his retirement account until he turns 93.00. He he will make contributions to his retirement account from his 26th birthday...
Derek plans to retire on his 65th birthday. However, he plans to work part-time until he...
Derek plans to retire on his 65th birthday. However, he plans to work part-time until he turns 71.00. During these years of part-time work, he will neither make deposits to nor take withdrawals from his retirement account. Exactly one year after the day he turns 71.0 when he fully retires, he will begin to make annual withdrawals of $161,481.00 from his retirement account until he turns 87.00. He he will make contributions to his retirement account from his 26th birthday...
Derek plans to retire on his 65th birthday. However, he plans to work part-time until he...
Derek plans to retire on his 65th birthday. However, he plans to work part-time until he turns 73.00. During these years of part-time work, he will neither make deposits to nor take withdrawals from his retirement account. Exactly one year after the day he turns 73.0 when he fully retires, he will begin to make annual withdrawals of $191,169.00 from his retirement account until he turns 89.00. After this final withdrawal, he wants $1.03 million remaining in his account. He...
Derek plans to retire on his 65th birthday. However, he plans to work part-time until he...
Derek plans to retire on his 65th birthday. However, he plans to work part-time until he turns 75.00. During these years of part-time work, he will neither make deposits to nor take withdrawals from his retirement account. Exactly one year after the day he turns 75.0 when he fully retires, he will begin to make annual withdrawals of $128,885.00 from his retirement account until he turns 94.00. He he will make contributions to his retirement account from his 26th birthday...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT