Question

Alicia has a job with a DC regulator that offers a terrific benefit package. The agency contributes an annuity of $510 into a bank account in her name at the end of each month, beginning one month from today. Alicia estimates that she will work for the next 40 years (for 480 months), when at that point she'll retire. At the time of her retirement, Alicia plans to withdrawal monthly amounts for 25 consecutive years (for 300 months), beginning at the end of the first retirement month. Assuming an interest rate of 9% annually, what is the maximum amount Alicia will be able to withdrawal, per month, during her retirement years?

Answer 1

We see that amount withdrawn per month=510/(9%/12)*((1+9%/12)^480-1)*(9%/12)/(1-1/(1+9%/12)^300)=20035.5894