Please advise

Joe is 55 and plans to retire and move to Aruba where he could live comfortably on a beach with retirement funds of  $750,000.  He recently inherited $400,000 that he safely invested at 6% annual interest compounded monthly.  At what age can he retire and start his Aruba retirement assuming he makes no additional investments in his retirement fund?  How much would he have to invest monthly to retire at age 60?                                                
Hopewell1976Asked:
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Arthur_WoodCommented:
this seems to be a homework problem.  What have you tried, in order to answer this?

AW
omesieCommented:
If he doesn't want to make anymore investments, he can retire in 10 years and 6 months (with $749866.20) or 10 years and 7 months with $753615.50

Now the other way is a bit harder. but he puts in $3115 every month, you should be able to get the same amount as long as it stays at the same interest rate.

If there is no interest on that money, then he'll need to put in $3530 every month.

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Hopewell1976Author Commented:
I am having trouble formulating it in excel.  I have tried to get some assistance with these functions, but it is very challenging.  I am not an excel genius and would be the first to admit.
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omesieCommented:
I did it with just simple formulas (sometimes simple answers are the best)

work it out per month.  first month = 400000

If you're getting 6% every year, on a monthly basis, each month, you need to multiply by 0.06/12.
Make sure you use brackets around that.

so say B1 = 400000
equation in B2 should be [ =B1+B1*(0.06/12) ]

copy that equation and fill down about 200 rows.  Where you see 750K, that'll give you number of months it'll take. i.e. divide by 12 and work out years.

to work out monthly amount needed in 5 years without any interest, go to B60.
Create a new equation in any cell nearby ( =(750000-B60)/60)

That should give you monthly amount needed.

Now the final step, a bit harder because I don't feel like thinking.  I just guessed a few number.
Started with 3000 a month.

Equation to use.  Change B2 to   =B1+B1*(0.06/12)+3000 and then fill down.
I just kept changing the final number until I had what I needed at Row 60.
Hopewell1976Author Commented:
You're awsome! thank you!
Hopewell1976Author Commented:
geez, I'm actually screwing up over here...is it possible for you to attach the excel sheet?
omesieCommented:
I made a mistake... not sure what I typed in before but monthly pay without interest is actually 3552.40

Enjoy

retiring.xlsx
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