Question

A young couple, both 25 years old, are planning to retire in 40 years at the...

A young couple, both 25 years old, are planning to retire in 40 years at the age of 65. After they retire,

they expect to live for an additional 20 years, until age 85. They plan to begin saving for retirement today

and based on information from their financial planner, they think they will earn 8% on their investment

compounded annually. They think they will earn 5% on their retirement savings after they retire.

1. If they begin at age 25 to save $5,000 each year for the next 40 years, how much will this couple

have saved in their retirement account at age 65?

Answer: _____________________ (10 points)

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Answer #1

Total savings = sum of all savings = 1295282.59 = 1295283

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