You have accumulated $325,000 in a retirement account and continue to earn 8 percent on invested funds.
Question:
You have accumulated $325,000 in a retirement account and continue to earn 8 percent on invested funds.
a) What amount may you withdraw annually starting today based on a life expectancy of 20 years? How much will be in the account at the end of the first year?
b) Suppose you take only out 1/20 of the funds today and the remainder continues to earn 8 percent. How much will be in the account at the end of the first year? Compare your answer to (a). Why are they different?
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