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Angela is 22 years old and would like to retire at the age of 62 with...

Angela is 22 years old and would like to retire at the age of 62 with $1,000,000 in her retirement account. Assuming a 6% return, how much does Angela need to put away on a monthly basis to ensure her retirement goal of $1,000,000? Assume those monthly payments are made at the end of the month. You must show your work!

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Answer #1

Solution:

Angela would start the saving when she is 22 and this will continue till when she is 62. Means that the time = 40 years = 40 *12 = 480 months

Annual return = 6% , Monthly return = 6%/12 = 0.5%

Future value = $1,000,000

Future value of annuity formula can be used to find the monthly saving to reach the retirement goal

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