How long will the money last?
Contents
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.