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Go to the Explore It! titled Retirement Nestegg Calculator. This Explore It! calculates the present value of an ordinary annuity. In particular, it calculates how
Go to the Explore It! titled "Retirement Nestegg Calculator." This Explore It! calculates the present value of an ordinary annuity. In particular, it calculates how much you need to have at retirement to fund your retirement withdrawals. Assume that you retire at age 65 and plan to pass away after your thirtieth withdrawal on your 95th birthday. So, enter "30" in the "Years of Retirement Income" box. Assume an interest rate of 8%. (It is low because it is a real rate of interest and because you don't want to take a lot of risk in retirement.) Enter "78000" as your "Periodic Income in Retirement." Finally, select "annually" as your Payment Frequency. (Do NOT check the "Beginning of Period Payment" box, so it is assumed that your first withdrawal is actually on your 66th birthday.) How much do you need at retirement? The present value of this ordinary annuity is $| (Round to the nearest dollar.)
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