I am 53 years old. I want to retire at age 70. I am setting up a new retirement

Question

I am 53 years old. I want to retire at age 70. I am setting up a new retirement saving account that earns interest at a 3% annual interest rate (APR). I want to make monthly contributions to the account from now until I retire. The goal is to save enough money so that I will be able to withdraw money each month without depleting by principal, ( in reality I will probably deplete my principal gradually). At my retirement age I will withdraw $1500.00 a month. Let assume I will live until I'm 90

1. How much money do I need to contribute to the account each month?

Explanation / Answer

Let us assume he will live till age of 80 years

The present value of money he consumes assuming 1500 per month from age of 70 to 80 is :

use pv formuale here
=pv(rate,nper,pmt,fv,type)
rate=4%/12=0.25%
nper=10*12=120
pmt=1500
type=0
=PV(4%/12,120,1500,,0)=$148,155.26

use pmt formuale and asuume the FV values as above
=pmt(rate,nper,pv,fv,type)
=PMT(4%/12,(17*12),,148155.26,0)
=$508.26

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