If you want to retire in 25 years, draw $50,000 each year forever, with an APR of 7%, how much do you need to deposit every month?
+118658 If you want to retire in 25 years, draw $50,000 each year forever, with an APR of 7%, how much do you need to deposit every month?
To draw $50,000 out at the end of each year for ever than it will only be the interest that your are drawing out.
I=PRT
50000=P*0.07*1
50000/0.07 = approx $714 286
Plus I suppose you will want to draw out 50,000 straight away so you will need to save $764 286.
Now I will assume that the 7% is a nominal annual rate.
The real rate for depositis is 7/12 = 0.58333333... % per month and this will go one for 25*12 = 300months.
I will assume that the deposit is made at the end of each month (even the very last month)
764286=C*((1.0058333333333)^300-1)/0.00583333333333
C= 764286/(((1.0058333333333)^300-1)/0.0058333333333)
764286/(((1.0058333333333)^300-1)/0.0058333333333) = 943.4794556918817245
It seems that you will need to save $944 per month.
