In: Finance
Tony Robbins’ wealth strategy: save $300 per month from age 20 to age 30 (i.e. 10 years), and then you stop making any monthly deposits, and you leave the account alone until you are 65 years old (i.e. leave it alone for 35 years). Question Three: At 65years old, you have saved up a lot of money. Now, you’re retired and want to take out a monthly annuity payment from the account, such that at age 95 the value of the account is zero. If you live to 96, you’ll move in with the kids. If the account still earns 8.000%(A), what is the monthly payment you can withdraw.Answer in $, to two decimal places i.e. $x,xxx.xx
Step 1: Find the value of our account at age 30
Number of monthly payments, n = 10 * 12
n = 120
Monthly interest rate, r = 8%/12
r = 0.006666666667
PMT = 300 per month
This formula gives the value of the account at age 30
The value of the account at age 30 = $54,883.81
Step 2: We need to find the value of our savings at age 65
FV65 = FV * (1 + r)^n
n = (65 - 30) * 12 = 420
n = 420 months
Monthly interest rate, r = 8%/12
r = 0.006666666667
FV65 = FV * (1 + r)^n
FV65 = 54,883.810557 * (1 + 0.006666666667)^420
FV65 = 54,883.810557 * 16.2925499
FV65 = $894,197.2222020692
Step 3: We will find the monthly withdrawal with this as PV
Number of withdrawals, n = (95 - 65) * 12
n = 360 monthly withdrawals
Monthly interest rate, r = 8%/12
r = 0.006666666667
We can withdraw $6,561.30 per month for 30 years
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