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You are planning your retirement in 10 years. You currently have $174,000 in a bond account and...

Question:

You are planning your retirement in 10 years. You currently have $174,000 in a bond account and $614,000 in a stock account. You plan to add $6,600 per year at the end of each of the next 10 years to your bond account. The stock account will earn a return of 11 percent and the bond account will earn a return of 7.5 percent.

When you retire, you plan to withdraw an equal amount for each of the next 21 years at the end of each year and have nothing left. Additionally, when you retire you will transfer your money to an account that earns 6.75 percent.

How much can you withdraw each year in your retirement?

Retirement Plan:

Retirement plan refers to the planning of The individuals where they get monthly or yearly payment when they retire. For this purpose, they invest in some retirement plans or fund their retirement account

Answer and Explanation: 1

Future value of bond account $ 451,990.27 FV(7.5%,10,-6600,-174000)
Future value of stock account 1743404.49 FV(11%,10,0,-614000)
Amount available on retirement date 2195394.75
Annual withdrawal amount $ 198,557.96 PMT(6.75%,21,-$2,195,394.75,0)

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Understanding Retirement and Pension Plans

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Chapter 17 / Lesson 9
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Retirement plans are saving plans, usually offered through an employer, that help employees put away money for retirement. Discover the different types of retirement plans, pension plans, and how they work.


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