I am having a terrible time with what should be a simple calculation:
How much can a saver withdraw monthly from a lump-sum of $312,000 if the assumed return is 4.5% and the life expectancy is 28 years. (We want it to zero out in 28 years.)
Every calculator I've found on line shows a max annual withdrawal that is less than the interest-only of 4.5%. Jeez I feel stupid and deserve the hell I will catch for this question.
-HW "Skip" Weldon Columbia, SC
Try a 28-year loan calculator.
Elizabeth Richardson
1634.82
The excel equation is =PMT(0.00375,336,312000) Where that .00375 is just the monthly interest as a decimal. For all the good work you do, and kindness you offer, I'd only rib you about the brain cramps we get as we age.
Joe
Elizabeth we're going to have to work on your being more succinct with your posts.
Seriously, thanks.
-HW "Skip" Weldon Columbia, SC
The OP might want to consider an immediate annuity. An annuity of $312,000 pays a 66 year old male $2,308 per month for life. Find out what the payout would be in your situation at
OK, so that didn't really answer your question. It just seemed you were working too hard on the annuity side, when figuring out the loan payment is much easier. It's a question of having loaned the bank the money, now how much is it's payment. Skip knows this, he was just having a brain black hole moment, I just thought maybe a lurker might want/need to give this a whirl, too. Give a man a fish and he eats for a day, teach him to fish and he eats for a lifetime.
Elizabeth Richardson
Since the question referenced a 28 year payout, a peculiar number of years to say the least, I suspect the OP is not 66 and is not looking for a lifetime payout. I think the reason your example is higher than the specific payment requested is that the annuity company isn't expecting the 66 year old to live for 28 years.
Elizabeth Richardson
The annuity vendors might be using a different interest rate than 4.5% and the mortality curve might be giving a boost to the payout.
In a taxable account it probably pays to delay an immediate annuity to age 70 in order to get the higher tax amortization on an annuity.
-- Ron
Elizabeth Richardson wrote: Give a man a fish and he eats for a day, teach him to fish and he eats
No, he neglects his chores, since he's too busy fishing.
Chip
On my HP:
PV = 312,000 i = 4.5/12 = 0.375 N = 28*12 = 336 FV = 0 ==> PMT = ? = 1634.82
(in END mode - meaning the first payment is made at the *end* of the first period. If the first payment is made at the *beginning* of the first period, the payment is 1628.70)
I got the same answer from Bankrate.com's mortgage calculator at
(END-mode only, of course, as mortgages are)
I don't think Skip told us the age of the investor in question, though.
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