Suppose you plan to retire at age 70, and you want to be able to withdraw...

Suppose you plan to retire at age 70, and you want to be able to withdraw an amount of $87,000 per year on each birthday from age 70 to age 100 (a total of 31 withdrawals). If the account which contains your savings earns 5.7% per year simple interest, how much money needs to be in the account by the time you reach your 70th birthday? (Answer to the nearest dollar.)

Hint: This can be solved as a 30-year ordinary annuity plus one withdrawal at age 70, or as a 31-year annuity due.

Expert Solution

Money needed in the account at the age of 70 is $1,323,985 calculated as the present value of annuity due, as follows:

jeff jeffy answered 4 months ago

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Suppose you plan to retire at age 70, and you want to be able to withdraw...

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