Question

You want to begin a saving for your retirement. You plan to contribute 12.000 to the account at the end of this year. You anticipate you will be increase your annual contributions by 3% each year for the next 45 years. IF your expected return is 8% (A.c.a), how much do you expect to have available for the consumption every month (suppose a constant amount of money every month) if you are planning to live 30 years more after retiring?

Answer 1

First, let's find the future value of the annual contribution.

g = 3%

PMT = 12,000

r = 8%

n = 45

Now, with this as PV, let's find the monthly payment

PV = 6,753,324.851664

n = 30 * 12 = 360

r = 0.08/12 = 0.006666666667

We can withdraw $49,553.5053207799 monthly for 30 years