Question

If I put $4million into a retirement account earning 4%, for 24 years, and at the same time am pulling out 450,000 each year (over same 24 year timeframe), will there be enough money in there so I reach zero dollars at the end of that 24 years? and if not, what is my excess or shortfall in the account? solve using excel formulas/spreadsheet (specifying which values are PV, FV, PMT, etc).

Answer 1

Hello Sir/ Mam

YOUR REQUIRED ANSWER IS SHORTFALL = $7,333,925.20

You are putting $4m in account right now.

Hence,

PV = -4,000,000

n = 24

Rate = 4%

And as you are withdraing $450,000 each year, hence,

PMT = 450,000

Now, using excel formula, "=FV(4%,24,450000,-4000000,0)", we get FV = -$7,333,925.20

I hope this solves your doubt.

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