Jodi is retiring at the age of 65. When she retires, she estimates that she will need a monthly income for 25 years. If Jodi starts with $328,133.32 in an account that pays 6.2% interest compounded monthly, approximately what monthly income will she be able to draw?

Use the present value formula for equal monthly withdrawals: payment = present value × monthly rate ÷ [1 − (1 + monthly rate)^−number of payments]. The monthly rate is 0.062 ÷ 12, and 25 years gives 300 monthly payments. Substituting $328,133.32 gives a monthly withdrawal of about $2,154, so the best answer is $2,154.

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