You have $0 in your bank account today and have decided to start depositing ever

Question

You have $0 in your bank account today and have decided to start depositing every month for your after-retirement life. You just turned 30 years old and would like to able to withdraw $20,000 at the beginning of each month for 20 years after your 60th birthday. How much will you need to deposit into his account at the end of each month, starting one month from today and ending on his 60th birthday? You bank account earns 12 percent annual interest, compounding monthly, both before and after his retirement.

$423.51

$556.33

$336.55

$285.27

$524.91

Explanation / Answer

Amount required for retirement income P+P×[1-(1÷(1+r))^(n-1)]÷r Here, 1 Interest rate per annum 12.00% 2 Number of years                                                                             20 3 Number of compoundings per per annum                                                                             12 4 = 1÷3 Interest rate per period ( r) 1.00% 5 = 2×3 Number of periods (n) 240 Payment per period (P) $                                                                 20,000 Amount required for retirement income $                                    1,834,552 20000+20000*(1-(1/(1+1%))^(240-1))/1% Deposit in each month (P) FVA÷([(1+r)^n-1]÷r) Here, 1 Interest rate per annum 12.00% 2 Number of years                                                         30 3 Number of payments per per annum                                                         12 1÷3 Interest rate per period ( r) 1.00% 2×3 Number of periods (n) 360 Future value of annuity (FVA) $                                      1,834,552 Deposit in each month (P) $                           524.91 1834552/(((1+1%)^360-1)/1%)

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