Precision Financial Calculator

Example 5-2 Annuity Calculation: Distributions

Continue from the previous example. Assume your life expectancy is 95. That means after retirement you have 30 years you want to consume the savings. How much money can you withdraw monthly for your living assuming the interest rate is 7% after you retire?

[Answer: $1,093.65]

[Procedure]

Go to the Annuity Distribution tab. The Present Value inherits from the Savings calculation. Select Monthly as the Payoff Period. Select Amount of each Payoff as an item to be calculated. Enter 30 as the Number of Years, Interest Rate as 7%, then click Calc. You get the answer. Go to the Schedule tab and the chart window. You will see you still get a significant interest portion even if you are withdrawing money from the account.

Try different scenarios for practice. For example, assume you want to withdraw $2,000 monthly instead. How long will it last before the account is fully depleted?

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