document.write( "Question 1204183: You have $400,000 saved for retirement. Your account earns 8% interest. How much will you be able to pull out each month, if you want to be able to take withdrawals for 25 years?\r
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Algebra.Com's Answer #840264 by ikleyn(52786) $\"\"$ $\"About$

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\n" ); document.write( "You have $400,000 saved for retirement. Your account earns 8% interest.
\n" ); document.write( "How much will you be able to pull out each month, if you want to be able to take withdrawals for 25 years?
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\n" ); document.write( "\n" ); document.write( "        This problem is posed incorrectly. To be correct, the problem must to point WHEN the withdrawals
\n" ); document.write( "        are made, at the end or at the beginning of each compounding period (which is month).
\n" ); document.write( "        Usually/traditionally, in such problems it is assumed that the withdrawals are made at the BEGINNING
\n" ); document.write( "        of each month for living. So I will follow this hypothesis. But I should notice, with the DEEP SORROW,
\n" ); document.write( "        that the creators of this problems do not know the basics of the subject and are not able to pose the problem in a right way.\r
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document.write( "Use the general formula  A = .\r\n" );
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document.write( "Here A is the initial amount at the account; W is the monthly withdrawn value at the beginning of each month; \r\n" );
document.write( "r is the nominal monthly percentage r = 0.08/12 presented as a decimal;  \r\n" );
document.write( "p = 1 + r  and n is the number of withdrawing periods (months, in this case).\r\n" );
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document.write( "In this problem,  W is the unknown;  the monthly rate is  r = 0.08/12,  \r\n" );
document.write( "p = 1 + 0.08/12, the number of payment periods (= the number of months) is n = 25*12 = 300.  So\r\n" );
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document.write( "          400000 = .\r\n" );
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document.write( "The factor   is equal to 130.4282861;  therefore\r\n" );
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document.write( "           W =  = 3066.82 dollars.\r\n" );
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document.write( "Thus you will be able to withdraw $3066.82 every month (at the beginning of each month) during 25 years.\r\n" );
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\n" ); document.write( "\n" ); document.write( "In this site, there is a group of lessons associated with annuity saving plans and retirement plans. They are\r
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\n" ); document.write( "\n" ); document.write( "    - Ordinary Annuity saving plans and geometric progressions\r
\n" ); document.write( "\n" ); document.write( "    - Annuity Due saving plans and geometric progressions\r
\n" ); document.write( "\n" ); document.write( "    - Solved problems on Ordinary Annuity saving plans \r
\n" ); document.write( "\n" ); document.write( "    - Withdrawing a certain amount of money periodically from a compounded saving account (*)\r
\n" ); document.write( "\n" ); document.write( "    - Miscellaneous problems on retirement plans \r
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\n" ); document.write( "\n" ); document.write( "From these lessons, you can learn the subject and can see many similar solved problems.\r
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\n" ); document.write( "\n" ); document.write( "The closest lesson to your problem is marked (*) in the list.\r
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