When you retire 40 years from now you plan to make 10 withdrawals from your savings account. You will need $133,801 per year for 2 years then $141,464 for 3 years, $163,243 for 4 years and the final year $193,941. You want to start saving for retirement now and plan to make monthly payments for 20 years into an account that yields 8 percent compounded annually. After these deposits, you plan to leave the money in the savings account until retirement earning the same interest. Assume end-of-year payments. What is the value of these withdrawals at the end of year 40? What is the value of these withdrawals at the end of year 20? What should these 20 annual payments be in order to satisfy your retirement needs?
When you retire 40 years from now you plan to make 10 withdrawals from your savings account. You will need $133,801 per year for 2 years then $141,464 for 3 years, $163,243 for 4 years and the final year $193,941. You want to start saving for retirement now and plan to make monthly payments for 20 years into an account that yields 8 percent compounded annually. After these deposits, you plan to leave the money in the savings account until retirement earning the same interest. Assume end-of-year payments.
What is the value of these withdrawals at the end of year 40?
What is the value of these withdrawals at the end of year 20?
What should these 20 annual payments be in order to satisfy your retirement needs?
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