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

Answer:

See the attached formula (the "n" means number of years):

We know principal = $600,000 rate = .055 and "n" = 20

Annual Payout = Principal * rate * (1 +r)^n / [(1 + rate)^n  -1]

Annual Payout = 600,000 * .055 * (1.055)^20 / [{(1.055)^20}-1]

Annual Payout = 600,000 * .055 * 2.9177574906 / 1.9177574906

Annual Payout = 96,286.00 / 1.9177574906

Annual Payout = 50,207.60

To get a monthly payout we divide by 12 and get:

4,183.97 per month

Source:  https://www.1728.org/annupay2.htm   (formulas)

https://www.1728.org/annupay.htm (calculator)

Step-by-step explanation: