Question

Assume you are 25 and earn $32,500 per​ year, never expect to receive a​ raise, and...

Assume you are 25 and earn $32,500 per​ year, never expect to receive a​ raise, and plan to retire at age 55. If you invest 5 percent of your salary in a​ 401(k) plan returning 6 percent​ annually, and the company provides a​ $0.50 per​ $1.00 match on your contributions up to 3 percent of​ salary, what is the estimated future value of your​ 401(k) account? Once you​ retire, how much can you withdraw monthly if you want to deplete your account over 25 ​years?

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Answer #1
Particulars Amount
Annual salary             32,500
× Perecent deposit 5%
Deposit          1,625.00
Add: employer contribution             812.50
Total deposit          2,437.50
× FVAF        79.05819
Future value     192,704.33
× Sinking fund factor 0.006443
Withdrawal          1,241.60

Answer is:

1,241.60

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