Hopewell1976
asked on
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?
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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.
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.
ASKER
You're awsome! thank you!
ASKER
geez, I'm actually screwing up over here...is it possible for you to attach the excel sheet?
I made a mistake... not sure what I typed in before but monthly pay without interest is actually 3552.40
Enjoy
retiring.xlsx
Enjoy
retiring.xlsx
ASKER