Question

A client comes to see you for retirement planning. They plan to retire in 4 months on their 66th birthday. They are planning on living until age 91 (they added a few years to their estimate of reality to stay conservative). They are investing in such a way that should generate average annual returns of 6.5%. If they have $575,000 in retirement assets, then how much annual income could they expect

Answer 1

The annual income that the client could withdraw is:

$44,262.30.

Step-by-step explanation:

PV of retirement assets = $575,000

Interest rate on the assets = 6.5%

Number of retirement years = 25 (91 - 66)

Using an online finance calculator,

They can expect to retrieve $44,262.30 at the beginning of each period to reach the future value of $0.00.

FV (Future Value) $0.00

PV (Present Value) $575,000.00

N (Number of Periods) 25.000

I/Y (Interest Rate) 6.500%

PMT (Periodic Payment) $-44,262.30

Starting Investment $575,000.00

Total Principal $-531,557.55

Total Interest $531,557.55