In: Finance
You estimate you need to supplement your social security payments with monthly withdrawals of $3,420.00 per month from a private investment account during the first 24 years of your retirement. Assuming you can earn annual returns of 6.9% in your investment account during your retirement years, how much money do you need to have accumulated in your investment account by the day you retire in order to fund the aforementioned monthly withdrawals?
FV = 0
I/Y = 6.9% annually i.e 6.9%/12 = 0.5750% monthly
PMT = $3,420 per month
N = 24 years i.e 288 months
So, PV = 480,698.1770
Hence, $480,698.1770 needs to be accumulated in the investment
account by the day I retire in order to fund the aforementioned
monthly withdrawals.