Question 852917: could somebody help me figure out how to do this problem?
"You want to be able to withdraw $40,000 from your account each year for 20 years after you retire.
You expect to retire in 15 years.
If your account earns 4% interest, how much will you need to deposit each year until retirement to achieve your retirement goals?"
Found 2 solutions by ankor@dixie-net.com, rothauserc:
Answer by ankor@dixie-net.com(22740)   (Show Source):
You can put this solution on YOUR website! "You want to be able to withdraw $40,000 from your account each year for 20 years after you retire.
You expect to retire in 15 years.
If your account earns 4% interest, how much will you need to deposit each year until retirement to achieve your retirement goals?"
:
This is a complex equation, but using the annuity feature on my calc:
Assume you want 40k a yr for 20 yrs and it continues to pay 4%
You require $543,613 in the account when you retire
:
To have this amt in 15 yrs, paying 4%, you would have to deposit
$2,209 a month for 180 months (15 yrs) That's about $26500 a year
Answer by rothauserc(4718)  (Show Source):
You can put this solution on YOUR website! you expect to withdraw $40,000 for 20 years = $800,000
we can use the future value calculation for an annuity
FV = C * [ ((1+i)^n - 1) / i) ]
C = cash flow per period, FV is the $800,000, i = interest and n is time
800000 = C * [ ((1+ .04)^15 - 1) / .04 ]
800000 = C * 20.02
C = 800000 / 20.02
C = 39960.03
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