Question

A 20 year old wants to retire as a millionaire by the time she turns 70....

A 20 year old wants to retire as a millionaire by the time she turns 70. (With life spans increasing, and the social security fund being depleted by baby boomers, the retirement age will have invariably risen by the time she reaches 65 years of age, probably to something even higher than 70, actually.) How much will she have to save at the beginning of each month if she can earn 5% compounded annually and have $1,000,000 by the time she is 70?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

The amount to be saved in each month is found using the future value of annuity equation. The payments are made at the beginning of each month, hence the future value of annuity due equation is used.

In the above equation, solving for the value of A will give the amount we have to save each month to reach the retirement goal in 50 years.

The amount to be saved at the beginning of each month = $ 373.17 $ 373.2

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Suppose you want to retire when you reach age 70, at that time you want to...
Suppose you want to retire when you reach age 70, at that time you want to have $1,000,000 accumulated in your retirement account. Now your 25 years old, starting today, how much you have to save equally, at the beginning of each year, in order to reach your retirement goal if the account earns 5% annually compounded interest?
Alexa is saving for retirement, she is 35 years old and wants to retire at 70....
Alexa is saving for retirement, she is 35 years old and wants to retire at 70. She estimates that she will need to have $1.2 million to retire comfortably. She currently deposits $550 a month into her account 401k, what APR does she need to earn?
Nikola is currently 47 years old and planning to retire at age 63. She has already...
Nikola is currently 47 years old and planning to retire at age 63. She has already saved $247,000.00 in her RRSP. If she continues to contribute $400.00 at the beginning of every month, how much money will be in her RRSP at retirement if it can earn 8% compounded monthly? No deposit is made the day she turns 63. At retirement, Nikola’s $247,000.00 will have grown to   and her $400.00 deposits will have grown to   , for a total of...
Stefani​ German, a​ 40-year-old woman, plans to retire at age​ 65, and she wants to accumulate...
Stefani​ German, a​ 40-year-old woman, plans to retire at age​ 65, and she wants to accumulate ​$440,000 over the next 25 years to supplement the retirement programs that are being funded by the federal government and her employer. She expects to earn an average annual return of about 6% by investing in a​ low-risk portfolio containing about 20% ​short-term securities, 30% common​ stock, and 50% bonds. Stefani currently has ​$27,960 that at an annual rate of return of 6% will...
Stefani? German, a? 40-year-old woman, plans to retire at age? 65, and she wants to accumulate...
Stefani? German, a? 40-year-old woman, plans to retire at age? 65, and she wants to accumulate ?$430 comma 000 over the next 25 years to supplement the retirement programs that are being funded by the federal government and her employer. She expects to earn an average annual return of about 5 % by investing in a? low-risk portfolio containing about 20 % ?short-term securities, 30 % common? stock, and 50 % bonds. Stefani currently has ?$41 comma 342 that at...
Emily Dorsey's current salary is $84000 per year, and she is planning to retire 20 years...
Emily Dorsey's current salary is $84000 per year, and she is planning to retire 20 years from now. She anticipates that her annual salary will increase by 2000 each year ($84000 the first year, to $86000 the second year, $88000 the third year, and so forth), and she plans to deposit 5 % of her yearly salary into a retirement fund that earns 4 % interest compounded daily. What will be the amount of interest accumulated at the time of...
Option 1: Suppose you want to be a millionaire before you retire at age 50. How...
Option 1: Suppose you want to be a millionaire before you retire at age 50. How could you reach that goal? This is the question, John, an 18 years old college student, is faced with as he plans his future. Here are his options. (Hit: Deposit a one time lump sum into an investment account and let it sit for 32 years.) i) Assuming that the investment account earned 9.8% interest, compounded monthly, how much would John have to deposit...
Your client is 20 years old. She wants to begin saving for retirement, with the first...
Your client is 20 years old. She wants to begin saving for retirement, with the first payment to come one year from now. She can save $8,000 per year, and you advise her to invest it in the stock market, which you expect to provide an average return of 11% in the future. If she follows your advice, how much money will she have at 65? Do not round intermediate calculations. Round your answer to the nearest cent. How much...
QUESTION 9 Suppose you plan to retire at age 70, and you want to be able...
QUESTION 9 Suppose you plan to retire at age 70, and you want to be able to withdraw an amount of $83,000 per year on each birthday from age 70 to age 100 (a total of 31 withdrawals). If the account which contains your savings earns 5.4% per year simple interest, how much money needs to be in the account by the time you reach your 70th birthday? (Answer to the nearest dollar.) Hint: This can be solved as a...
PROBLEM 7 – Time-Value-of-Money and Retirement Planning Ellen is 30 years old and plans to start...
PROBLEM 7 – Time-Value-of-Money and Retirement Planning Ellen is 30 years old and plans to start saving $10,000 annually, toward her retirement. She will put the $10,000 into an investment account at the end of each year. She will put this savings into a mutual fund. She intends to retire in 35 years. Upon her retirement, she will move her savings, (i.e. her “nest egg”) into a relatively low-risk account that earns 4.0% annually. Her first withdrawal will be made...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT