Question

if derek decides that he needs $193082.00 per year in retirement to cover his living expenses....

if derek decides that he needs $193082.00 per year in retirement to cover his living expenses. therefore he wants to withdraw $193082.0 on each birthday from his 66th to his 87th . How much will he need in his retirement acconunt on his 65th birthday ? Assume a intetest rate of 10%
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Answer #1

Derek wants to start withdrawing at the age of 66th until 87th, therefore, the total number of withdrawals is equal to 22. (i.e 87 - 65) because we need to count the 66th withdrawal also.

Now we can use the present value of the annuity formula to find the answer:

Where,
PVA = Present value of the annuity
A = Annuity
i = Interest rate in decimal form (i.e 10% = 0.10)
n = Number of years

Therefore,

Therefore, he will need $1,693,626.54 in his retirement account on his 65th birthday.

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