Question

You are planning for your retirement in 32 years. At that time you want to have enough saved to be able to afford to spend $250,000 per year (starting at time 33) for 22 years (if you live longer than 22 years your kids will have to support you).Suppose that at time 32 you will receive a retirement bonus of $60,000 from your company. If the annual percentage rate (APR) is expected to be 10 percent, compounded monthly, from now until time 32, how much would you need to save at the end of each month in order to be able to make the desired withdrawals at retirement (i.e., in order to have $1,685,736.1, including the bonus, saved at time 32)?

Answer 1

We see that the monthly savings is given as=PMT(10%/12,12*32,0,-1685736.1+60000)
=583.72086