How long will the money last?

Example #1

A client has accumulated $100,000 at retirement and wants to start taking payments of $1,000 per month. They feel they can safely earn a 4.5% rate of return. How long will the money last?

Data Entry

Use the following values for the prompts:


Prompt

Value


Calculation Type

Distributions


Calculate

Number of Years


Current Account Value

100,000


Interest Rate

4.5


Type of Distribution

Level Withdrawals


Distributions per Year

12


Distribution Amount

1,000


Distributions Made at

End of Period


Final Account Value

0

Place the cursor on the # of Years prompt and click on the Calculate Cursor Line button.

Result

Calculated Number of Years shows 10.4167.

Example #2

How long will the money last if the payments increase by 2% per year?

Data Entry

Change Type of Distributions to Annually Increase by Percent and set Annual Increase in Distribution to 2%.

Result

Calculated Number of Years now shows 9.4167 years.

Example #3

How long will the money last if the payments increase by 3% per year?

Data Entry

Change the Annual Increase in Distribution to 3%.

Results

Calculated Number of Years now shows 9.0833 years.