STRATEGY 1: SAVINGS EARLY PLAN
Assume that you are 22 years old and started saving for retirement on January 1, 2022. You plan to retire on December 31, 2068, when you are 68 years old. There are 47 years from the time you started investing (saving) until you retire. You have no previous or other retirement savings when you start to save. Assume there are 365 days and 52 weeks in each year from 2022 to 2068. (Ignore leap years). Assume that taxes will not affect any of the amounts or your savings.
You invest $25 at the end of each week into a retirement account paying 8.5% compounded weekly from January 1, 2022, 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 47 years?
Assuming you made all the monthly payments for 47 years, how much did you pay into your retirement account?
Assuming you made all the monthly payments for 47 years, how much interest did you earn over the 47 years?
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 43 years old. As a result, you start saving on January 1, 2043. You plan to retire on December 31, 2068, when you are 68 years old. There are 26 years from the time you started investing (saving) until you retire. When you start investing in 2043, you have no previous or other retirement savings. Assume there are 365 days and 52 weeks in each year from 2022 to 2068. (Ignore leap years). Assume that taxes will not affect any of the amounts or your savings.
You invest $25 at the end of each week into a retirement account paying 8.5% compounded weekly from January 1, 2043, 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 26 years?
Assuming you made all the monthly payments for 26 years, how much did you pay into your retirement account?
Assuming you made all the monthly payments for 26 years, how much interest did you earn over the 26 years?