You are setting up a retirement plan. You will make fixed monthly contributions to a pension fund, until you retire 30 years from now. After retirement, you are planning to withdraw a fixed amount “A” each month for the next 20 years. Assume that the fund earns a fixed 6% return.
Part 1: If your plan is to withdraw $2000 each month, how much would you have to pay into the fund each month before you retire?
Part 2: How much can you withdraw each month after retirement, if you can only afford to contribute $250 each month to fund?
Show all of your work.