STRATEGY 1: SAVINGS LATER PLAN Assume that you are 22 years old but decide to...
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STRATEGY 1: SAVINGS LATER PLAN
Assume that you are 22 years old but decide to wait before saving for retirement. You decide to start saving later when you are 42 years old. As a result, you start saving on January 1, 2042. You plan to retire on December 31, 2064, when you are 64 years old. There are 23 years from the time you started investing (saving) until you retire. When you start investing in 2042, you have no previous or other retirement savings. Assume there are 365 days in each year from 2022 to 2064. (Ignore leap years). Assume that taxes will not affect any of the amounts or your savings.
You invest $250 at the end of each month into a retirement account paying 8.75% compounded monthly from January 1, 2042, until you retire. Show all work and answer the following questions:
Assuming no withdrawals or additional payments were made, how much money will be in your retirement account after 23 years?
Assuming you made all the monthly payments for 23 years, how much did you pay into your retirement account?
Assuming you made all the monthly payments for 23 years, how much interest did you earn over the 23 years?
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