This is a classic retirement problem. A time line will help in solving it. Your

Question

This is a classic retirement problem. A time line will help in solving it. Your friend is celebrating her 30th birthday today and wants to start saving for her anticipated retirement at age 65. She wants to be able to withdraw $121,000 from her savings account on each birthday for 20 years following her retirement; the first withdrawal will be on her 66th birthday. Your friend intends to invest her money in the local credit union, which offers 6.6 percent interest per year. She wants to make equal annual payments on each birthday into the account established at the credit union for her retirement fund.

Suppose your friend

Explanation / Answer

Since you've done parts (a) and (b) correctly, it seems like you know all the formulas. You just need some help on how to structure part (c). You have to do it in several steps, some of which you've already done. Step 1: How much money you'll need at retirement. $544,869.16 (this, you've already calculated from part (a)) Step 2: Future value of 30,000. 10 years at 12% interest. $93,175.45 Step 3: Future value of 38 payments of $300 at 12% interest. $182,949.16

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