Jeff has just started saving for retirement. He wants to be able to withdraw $3,

Question

Jeff has just started saving for retirement. He wants to be able to withdraw $3,000 a month for 20 years after retirement. (The first withdrawal comes one month after retirement, so it is a regular annuity, not an annuity due). Jeff has found the perfect retirement account that will provide him 5% interest compounded monthly.

How much money should Jeff have in his retirement account at retirement to be able to make these withdrawals of $3,000 a month all through his retirement?

If Jeff wants to make monthly deposits into his retirement account, starting next month and continuing for the next 35 years until he retires, what should his monthly deposit be in order to have enough money at retirement?

Explanation / Answer

1)

How much money should Jeff have in his retirement account at retirement

=3000*((1-(1+(5%/12))^(-20*12))/(5%/12))

=454575.94

2)

what should his monthly deposit be in order to have enough money at retirement

=454575.94/(((1+(5%/12))^(35*12)-1)/(5%/12))

=400.12

the above is answer..

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