Can someone help me solve a Retirement question?
Client would like to withdraw 60K per year from the age 60 to 85. Given an interest rate of 4%, what is the amount the client will need to have saved to facilitate this retirement plan?
Thanks,
NA作者: justin88 时间: 2013-4-8 13:53
You didn’t specify beginning or end of period payments.
If you are withdrawing one payment for 15 years starting at the end of the first year, you put this into your calculator:
PMT=60000 FV=0 i=4 n=15 cpt pv=667,103.25
If you are withdrawing at the beginning of each year, you need to change your calculator to begin mode and input the same info to arrive at pv = 693,787.38作者: pogo 时间: 2013-4-8 13:54
Awesome. Thanks very much.
N = 25 not 15…
But it was FV = 0 that I was having a problem with…
Thanks again,
NA作者: draz 时间: 2013-4-8 13:54
oops… lol
yeah the fv = 0. when no info is given about a variable such as pv, fv or pmt, it is safe to assume it is 0. and intuitively this makes sense. in the future, at the end of 25 years, when he is 85, the savings should be completely depleted.作者: jim8z3 时间: 2013-4-8 13:55
I thought FV=60K as client wants to have 60K starting from year 60 till 85. We need to calculate PV at t=59.
I tried this way :
FV=60000, interest=0.04, t=25 years. So at 59th year we can assume ordinary annuity for 25 yrs.
PV(at t=59)=FV*[(1(1+r)^t)/r]= 60000*[(1(1.04)^25)/0.04]=937324.80
Is it wrong?作者: chandsingh 时间: 2013-4-8 13:55
Hi,
Can anyone please correct me if I am wrong? I have done the calculation below作者: cross-ied 时间: 2013-4-8 13:55
kartik
This is an annuity so
PV = A [(1(1+r)^t)/r]
topher used n=15 instead of 25 otherwise the answer is the same.
use ur calc PMT = 60k, 1/Y=4, N=25, FV=0 .CPT PV作者: Zesty 时间: 2013-4-8 13:56
There should be 26 payments right? I did on spreadsheet. If he get paid at end of year, he needs $958,966.15, and 997324.7966 at the beginning.
PV=60000( (11.04^26) / 0.04) = 958966.15 (withdraw at the end)
PV= 60000 + 60000( (11.04^25)/0.04) = 997324.79 (beginning)
Tell me if you think I am wrong. Also I don’t even use the advance function on my calculator. It is too confusing and you have to clear the memory every time. I just punch in the number in the sequence based on the formula. I am really fast with this ^^.作者: SFoyil 时间: 2013-4-8 13:57
I assume you would calculate this as an annuity due. Therefore, you would have payments of $60K at the beginning of each year for 25 years.
N=25
I/Y=4
PMT=60,000
Using the above assumptions, I get a PV of $974,817.79. Keep in mind, my calculator was in BEG mode.
If your calculator is in END mode, use N=24 and then add $60K for the initial payment.作者: svgleeson 时间: 2013-4-8 13:57
is this the full problem?
How old is he now?
Does he make the withdrawal immediately or at the end of the year?
I get the above $974,817.79.作者: Nishant1 时间: 2013-4-8 13:57
