Asked Dec 7, 2019

Ted has a nest egg of 1,000,000 in liquid assets and will be in retirement for 30 years. Using 5.5% how much can he spend a month to keep his nest egg intact, and how much a month to make his nest egg go to zero?


Expert Answer

Step 1

To keep her nest egg amount of $1,000,000 intact, Ted needs to withdraw 5.5%/12 of the liquid asset every month.


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monthly withdrawal = interest rate per month x amount of li quid asset 5.5% $1000000 12 = 0.458333333333333%x $1000000 = $4583.3333333

Step 2

Answer: He can withdraw $4583.33 every month for 30 years and can still keep his nest egg intact.

Step 3

Maximum amount that can be withdrawn to make the nest egg zero is calculated as...


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Values 25 Particulars Formula 26 Liquid Asset 10,00,000.00 5.50% 0.458333333333333%=B27/12 27 Annual interest rate 28 Monthly Interest rate 29 Number of years 30 Number of periods 30 360 =B29*12 31 $ 5,677.89001347003 =PMT(B28,B30,B26) 32 Annuity amount


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