What is the number of equal withdrawals that he can make?

Question

When Mr. Hong retires, he would have 500000 in his accounts which pays interest at 3% compounded monthly. He plans to withdraw 3000 every month for his expenses, beginning one month after he retires. What is the number of equal withdrawals that he can make?

Answer 1

Using a financial (time-value of money) calculator, use the following inputs:

 

I/Y = 3 (12-periods per year)

 

FV = 0

 

PV = $500,000

 

PMT = $3,000

 

Compute N

 

N = 139.49

 

Therefore, he would be able to continue this for 139 months, or, 11.5 years.