# Calculating the retirement payments

An engineer on the verge of retirement has accumulated savings of $200,000 in an account paying 10% compounded quarterly.

1. The engineer wishes to withdraw $7000 each quarter for living expenses. For how long can he/she withdraw that full amount?

10 years

12.5 years

15 years

25 years

For as long as he/she lives.

2. How much can he/she withdraw quarterly if he/she expects to live for only ten years after retirement?

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#### Solution Preview

1. The engineer wishes to withdraw $7000 each quarter for living expenses. For how long can he/she withdraw that full amount?

Interest rate per quarter=i=10%/4=2.5%

Periodic amount=R=$7000

PV of ...

#### Solution Summary

Solution describes the steps to calculate the time period within which a certain fund will be exhausted given a fixed periodic withdrawal. It also calculates the maximum withdrawal per period if expected life is given.