Answer to Question #119504 in Financial Math for 'Ana

Question #119504

John is currently 25 years old. He has $10,000 saved up and wishes to deposit this into a savings account which pays him J12 = 6% p.a. He also wishes to deposit $X every month into that account so that when he retires at 55, he can withdraw $2000 every month end to support his retirement. He expects to live up till 70 years. How much should he deposit every month into his account?

Expert's answer

The future value is: "FV = 15*12*2,000 - 10,000 = 350,000."

The monthly payment is:

"Pmt = \\frac{350,000\\times0.06\/12}{(1 + 0.06\/12)^{30\\times12} - 1} = 348.43."