You are retiring and the balance of your RRSP is $203 126.What amount of monthly income could this provide you for 20 years if you can get a four percent annual return?

Question

Quizplus · Accepted Answer

The correct monthly income can be calculated using the formula for the annuity payment from a present value, which is $PMT = \frac{PV \times r}{1 - (1 + r)^{-n}}$, where PV is the present value ($203,126), r is the monthly interest rate (4% annual rate divided by 12 months = 0.3333% per month), and n is the total number of payments (20 years x 12 months = 240). Plugging in the values, the correct monthly income is approximately $1223.

You Are Retiring and the Balance of Your RRSP Is