SOLUTION: You want to be able to withdraw $35,000 from your account each year for 20 years after you retire. You expect to retire in 15 years. If your account earns 6% interest, how mu

Algebra ->  Finance -> SOLUTION: You want to be able to withdraw $35,000 from your account each year for 20 years after you retire. You expect to retire in 15 years. If your account earns 6% interest, how mu      Log On


   

Question 1201517: You want to be able to withdraw $35,000 from your account each year for 20 years after you retire.
You expect to retire in 15 years.
If your account earns 6% interest, how much will you need to deposit each year until retirement to achieve your retirement goals?
Answer by Theo(13342) About Me  (Show Source):
You can put this solution on YOUR website!
35000 withdrawn at the beginning of each year for 20 years will have a present value of 425,534.08.
that's how much you will need in 15 years.
to have that amount of money in 15 years at 6% compounded annually, you will need to invest 18,282.12 at the end of each year.

35000 withdrawn at the end of each year for 20 years will have a present value of 401,447.24.
that's how much you willneed in 15 years.
to have that amount of money in 15 years at 6% compounded annually, you will need to invest 17,247.28 at the end of each year.

the interest rate is assumed to be compounded annually.
if what you need is different than that, you will need to specify how many times a year the interest rate needs to be compounded.
monthly is 12 times a year.
weekly is 52 times a year.
daily is assumed to be 365 times a year.

it helps to know whether the money is at the end of each time period or at the beginning of each time period for the first 15 years.
end of each time period is assumed, unless otherwise indicated.

it helps to know whether the money is withdrawn at end of each time period or at the beginning of each time period for the next 20 years.
the beginning of each time period is normally assumed, unless otherwise indicated.

here are the results for the investment at the end of each time period for the first 15 years and the withdrawal at the beginning of each time period for the last 20 years.





here are the resutls for the investmant at the end of each time period for the first 15 years and the withdrawal at the end of each time period for the last 20 years.





let me know if you have any questions about how this was done and / or what it means.
theo