You estimate you need to supplement your social security payments with monthly withdrawals of $3,420.00 per...

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?

Solutions

Expert Solution

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.

jeff jeffy answered 2 years ago

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