Question

You are trying to decide how much to save for retirement. Assume you plan to save $ 6,500 per year with the first investment made one year from now. You think you can earn 5.0​% per year on your investments and you plan to retire in 36 ​years, immediately after making your last $ 6,500 investment.

a. How much will you have in your retirement account on the day you​ retire?

b.​ If, instead of investing $ 6,500 per​ year, you wanted to make one​ lump-sum investment today for your retirement that will result in the same retirement​saving, how much would that lump sum need to​ be?

c.If you hope to live for 19years in​ retirement, how much can you withdraw every year in retirement​ (starting one year after​ retirement) so that you will just exhaust your savings with the 19th withdrawal​ (assume your savings will continue to earn 5.0%in​ retirement)?

Answer 1

1.
=FV(5%,36,-6500)=622936.097676342

2.
=PV(5%,36,-6500)=107554.536099205

3.
=PMT(5%,19,-FV(5%,36,-6500))=51544.8538693997