Find the amount of that initial withdrawal

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Reference no: EM132015885

Suppose you are now retired and expect to live for 20 years. Assume you have $800,000 invested in various accounts and expect these investments to earn a nominal annual rate of 6%.

You also expect inflation to average 3% per year. You want to withdraw a constant real amount annually over the next 20 years so as to maintain a constant standard of living (i.e., after your first withdrawal, each subsequent withdrawal will increase by 3% in nominal terms to cover the costs of inflation).

If the first withdrawal is to be made today, what is the amount of that initial withdrawal?

In a table or spreadsheet, show the remaining balance after each of your 20 withdrawals.

Reference no: EM132015885

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