Final answer:
To calculate how much you will be able to withdraw each month for retirement, you can use the formula for the future value of an ordinary annuity.
Step-by-step explanation:
To calculate how much you will be able to withdraw each month for retirement, you can use the formula for the future value of an ordinary annuity.
The formula is:
A = PMT((1+r)^n-1)/r
Where:
A = future value of the annuity
PMT = periodic payment amount
r = interest rate per period
n = number of periods
In this case, the future value (A) is the amount of money you have saved for retirement ($400,000), the interest rate per period (r) is 9% (converted to fraction form, r = 0.09), and the number of periods (n) is 20 years.
Plugging in the values, the formula becomes:
400,000 = PMT((1+0.09)^20-1)/0.09
Simplifying this equation will give you the monthly payment amount (PMT) you need to withdraw each month to last for 20 years of retirement.