Question

You plan to retire in 26 years. You are debating whether to deposit $46000 into an account earning 9 percent annually today or waiting 14 years before making the deposit. How much more will be in the account when you retire in 26 years if you make the deposit today as opposed to waiting 14 years to make the first deposit?

Answer 1

If you make deposit now:

Amount deposited = $46,000
Interest Rate = 9%
Time to Retirement = 26 years

Accumulated Sum = Amount Invested * (1 + i)^n
Accumulated Sum = $46,000 * 1.09^26
Accumulated Sum = $432,361.26

If you make deposit in 14 years:

Amount deposited = $46,000
Interest Rate = 9%
Time to Retirement = 12 years

Accumulated Sum = Amount Invested * (1 + i)^n
Accumulated Sum = $46,000 * 1.09^12
Accumulated Sum = $129,382.58

So, you will have $302,978.68 ($432,361.26 - $129,382.58) more if you invest today.