You are planning to save for retirement over the next 25 years. To do this, you will invest $820...

You can withdraw $8,672.70 each month from your account.

We first compute the future value your savings at retirement. Both accounts will have 25 * 12 = 300 contributions. The future value of the savings in the stock account is:

• {eq}\displaystyle \frac{820*((1 + 10.2\%/12)^{300} - 1)}{10.2\%/12} = 1,125,795.30 {/eq}

The future value of the bond account is:

• {eq}\displaystyle \frac{420*((1 + 6.2\%/12)^{300} - 1)}{6.2\%/12} = 300,181.33 {/eq}

Thus the total value of your retirement account = 1,125,795.30 + 300,181.33 = 1,425,976.63. After retirement you will need monthly expenses for 20 years, or 12 * 20 = 240 monthly withdrawals. At a 7.2% annual rate, the monthly discount rate is 7.2% / 12 = 0.6%. The monthly withdrawal is:

• {eq}\displaystyle \frac{ 1,425,976.63*0.6\%}{1 - (1 + 0.6\%)^{-240}} = 8,672.70 {/eq}