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Author: SAHO Date: 12/10/00 6:33 PM Number: 26524
Does anyone know the formulae for calculating how long a total investment earning a fixed rate of interest will last if you withdraw a fixed amount each month. For example How many months will \$100,000 invested at 8% last if I withdraw \$1,000 each month?

If you have Excel, there is a function:

=NPER((8/12)%,-1000,100000)

8/12% is the monthly interest rate
-1000 is the monthly withdrawal
100000 is the starting amount

Divide that by 12 to get 13.77837843 years

However, I want to emphasize that this will be correct only if the interest rate doesn't fluctuate at all (as with a CD). However, as soon as the interest fluctuates (like with stock market investments) the number of months goes down. You can download free Excel spreadsheets to look at this on the Retire Early website: http://home.earthlink.net/~intercst/reindex.html

These spreadsheets use actual historical data over all time periods to figure out the percentage of time your funds will last a particular period under historical market conditions. This is much more realistic than the above formula if you plan to have any of your money in the stock market.

Russ

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