Distribution Illustration Payouts
Contents
Example #1
A client wants to know how much money to deposit into an account that has a fixed rate of return of 4.5%. They need a monthly income of $1,200 over 25 years.
Data Entry
Prompt |
Value |
|
Calculation Type |
Distributions |
|
Calculate |
Current Value |
|
Interest Rate |
4.5 |
|
Number of Years |
25 |
|
Type of Distribution |
Level Withdrawals |
|
Distributions per Year |
12 |
|
|
|
|
Distributions Made at |
End of Period |
|
Amount of Each Distribution |
$1,200 |
|
Final Account Value |
0 |
Result
The deposit (Calculated Current Account Value) will need to be $217,895.15.
Example #2
What would the account balance need to be if they wanted $1,500 per month?
Data Entry
Change the Amount of Each Deposit prompt to $1,500.
Results
The deposit would need to be $272,369.03.
Example #3
What would the account balance need to be if they wanted to increase the payment by 3% per year?
Data Entry
Change the Type of Distributions to Annual Increase by Percent and enter 3% for the Annual Increase in Distribution prompt.
Results
The deposit would need to be $371,450.01.