Question

You are planning to save for retirement over the next 25 years. To do this, you will invest $900 a month in a stock account and $600 a month in a bond account. The return of the stock account is expected to be 9 percent, and the bond account will pay 6 percent. When you retire, you will combine your money into an account with a 8 percent return.   

How much can you withdraw each month from your account assuming a 20-year withdrawl period?

Answer 1

We should first calculate the future of investment to get value that can be investible for regular payments after retirements:

Using financial calculator BA II Plus - Input details:	Stock	Bond
I/Y = Rate / Compounding frequency =	0.75	0.50
PV = Present Value =	$0	$0
N = Number of compounding periods =	300	300
PMT = Payment	-$900	-$600
CPT > FV = Future Value =	$1,009,009.74	$415,796.38

Total of Stock and Bond Future Value = $1,009,009.74 + $415,796.38 =

$1,424,806.12

Now, we can calculate each month withdrawal for next 20 years:

Using financial calculator BA II Plus - Input details:	#
I/Y = Rate / Compounding frequency = 8/12 =	0.666667
FV =	$0.00
N = Number of compounding periods =	240
PV = Present Value = Total of Stock and Bond Future Value =	-$1,424,806
CPT > PMT =	$11,917.65

Each month withdrawal of $11,917.65 for next 20 years.