Question

You have $600,000 saved for retirement. Your account earns 5.5% interest. How much, to the nearest dollar, will you be able to pull out each

month, if you want to be able to take withdrawals for 20 years?

Answer 1

9514 1404 393

Answer:

$4127

Explanation:

The amortization formula is good for finding this value.

A = P(r/12)/(1 -(1 +r/12)^(-12t))

where P is the amount invested at rate r for t years.

A = $600,000(0.055/12)/(1 -(1 +0.055/12)^(-12·20)) = $4127.32

You will be able to withdraw $4127 monthly for 20 years.