Question

By the time you retire exactly at age 70 you will have saved $700,000 into your diversified portfolio of mutual funds, bonds, and t-bills. You expect to move onto the spirit world at exactly age 80. You do not want to have any money left over when you die. How much can you withdraw at the beginning of each month for 10 years of retirement if your annual rate of return is 6. 5%?.

Answer 1

You can withdraw $7,882 monthly for ten years with an annual return of 6.5% on the savings.

Data and Calculations:

Your Planned Retirement Age = 70

Your Life Expectancy = 80

Your Retirement Savings at Retirement = $700,000

Annual Contribution from Retirement = $0

Monthly Contribution from Retirement = $0

Average Investment Return  = 6.5%

Inflation Rate (Annual) expected = 0%

Result:

Balance at the retirement age of 70: $700,000

The amount you can withdraw monthly from 70 to 80: = $7,882

Thus, you can withdraw $7,882 every month for ten years.

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