How An Annuity ‘Amortizes’

How An Annuity ‘Amortizes’ -...

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Unformatted text preview: How An Annuity Amortizes While working, you saved for retirement. You just retired and expect to live another 30 years. You saved $500,000 and expect to earn 5% annually. How much money can you withdraw annually, starting at the end of the year, so that you spend your savings during your remaining lifetime? 1 How An Annuity Amortizes Since the payments ( C ), are greater than what is being earned (the interest), 2 0.05 Year Beginning Payment Interest Principal Ending 1 500,000.00 $ 32,525.72 $ 25,000.00 $ (7,525.72) $ 492,474.28 $ 2 492,474.28 $ 32,525.72 $ 24,623.71 $ (7,902.01) $ 484,572.27 $ 3 484,572.27 $ 32,525.72 $ 24,228.61 $ (8,297.11) $ 476,275.17 $ 4 476,275.17 $ 32,525.72 $ 23,813.76 $ (8,711.96) $ 467,563.21 $ 5 467,563.21 $ 32,525.72 $ 23,378.16 $ (9,147.56) $ 458,415.65 $ 6 458,415.65 $ 32,525.72 $ 22,920.78 $ (9,604.94) $ 448,810.71 $ 7 448,810.71 $ 32,525.72 $ 22,440.54 $ (10,085.18) $ 438,725.52 $ 8 438,725.52 $ 32,525.72 $ 21,936.28 $ (10,589.44) $...
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How An Annuity ‘Amortizes’ -...

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