SOLUTION: If you have $400,000 in your retirement account, and you are currently making 8% interest on your account, how much can you withdraw from it a year without decreasing the amount in

Question 1123821: If you have $400,000 in your retirement account, and you are currently making 8% interest on your account, how much can you withdraw from it a year without decreasing the amount in your account?

Answer by Theo(13342) (Show Source): You can put this solution on YOUR website!
you should be able to withdraw the interest requirement on the remaining balance which will keep the remaining balance stable.

if you have $400,000 in the account, and are currently earning 8% interest per year and you withdraw money at the end of each year, then you can withdraw .08 * 400,000 = 32,000 at the end of each year and keep the balance in the account the same.

you start with 400,000
at the end of the first year, the account has earned .08 * 400,000 = 32,000.
the remaining balance at the end of the year is 432,000.
you withdraw 32,000.
the remaining balance becomes 400,000.
as long as you only withdraw the interest accrued at the end of each year, this could go on forever.

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