Rashid wants to use $500,000 from his RRSP to purchase an annuity that pays him $2,000 at the end of each month for the first 10 years and $3,000 per month thereafter. Global Insurance Co. will sell Rashid an annuity of this sort with a rate of return of 4.8% compounded monthly. For how long will the annuity run?

Compounded Monthly

Interest calculation method where interest is added to the principal each month, increasing the amount on which subsequent interest is calculated.

RRSP

A Registered Retirement Savings Plan that allows individuals in Canada to save for retirement on a tax-deferred basis.

Annuity Payment

A fixed amount of money paid to someone each period, typically for the rest of their life or for a fixed number of years, as part of an annuity contract.