Question

Ms. Langley is 30 years old and has begun a retirement plan that permits he r to place monthly amounts of $400 into a retirement vehicle, beginning one month from now, for 30 consecutive years. When Ms. Langley reaches her retirement at age 60, she expects to live for 25 more years. What is the maximum amount that her retirement plan will allow her to spend, each month, throughout her retirement years? Assume that the retirement benefits begin one month after her retirement begins, and that the interest rate is 6%.

Answer 1

Instructions are listed below

Step-by-step explanation:

Giving the following information:

Ms. Langley is 30 years old and has begun a retirement plan that permits her to place monthly amounts of $400 into a retirement vehicle, beginning one month from now, for 30 consecutive years.

When Ms. Langley reaches her retirement at age 60, she expects to live for 25 more years. The interest rate is 6%.

First, we need to calculate the amount of money that she will have at age 60, using the following formula.

FV= {A*[(1+i)^n-1]}/i

A= monthly deposit= 400

n= 30*12= 360

i= 0.06/12= 0.005

FV= {400[(1.005^360)-1]}/0.005= $401,806.02

Months= 25years*12= 300 months

Monthly= 401,806.02/300= $1,339.35