Question

Assume that you saved $641,000 in a retirement account. The money is deposited in an account that earns 5% interest compounded Weekly. You want to retire and begin making weekly withdrawals from the account such that the money (principal and interest) lasts exactly 23 years. What is the amount of the weekly withdrawal?

Answer 1

-Present value of retirement account = $641,000

Calculating the Weekly withdrawal using PV of annuity formula:-

Where, C= Periodic Weekly withdrawals

r = Periodic Interest rate = 5%/52 = 0.0961538%

n= no of periods = 23 years*52 weeks = 1196

Present value = $641,000

C = $902.16

So, the amount of the weekly withdrawal is $902.16

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