You estimate you need to supplement your social security payments with monthly withdrawals of $3,420.00 per month from a private investment account during the first 24 years of your retirement. Assuming you can earn annual returns of 6.9% in your investment account during your retirement years, how much money do you need to have accumulated in your investment account by the day you retire in order to fund the aforementioned monthly withdrawals?
You estimate you need to supplement your social security payments with monthly withdrawals of $3,420.00 per month from a private investment account during the first 24 years of your retirement. Assuming you can earn annual returns of 6.9% in your investment account during your retirement years, how much money do you need to have accumulated in your investment account by the day you retire in order to fund the aforementioned monthly withdrawals?
Given:
Monthly withdrawal = $3,420
Interest rate = 6.9%
So, monthly interest rate = 0.069/12 = 0.58%
Time =24 years
Monthly period = 24*12 = 288
So, total amount at the beginning of retirement = Using excel PV function
Syntax: PV(monthly rate, total period, monthly withdrawal, , 0)
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