Janine is 25 and has a good job at a biotechnology company. She currently has $5
ID: 2721715 • Letter: J
Question
Janine is 25 and has a good job at a biotechnology company. She currently has $5,000 in an IRA, an important part of her retirement nest egg. She believes her IRA will grow at an annual rate of 8 percent, and she plans to leave it untouched until she retires at age 65. Janine estimates that she will need $875,000 in her total retirement nest egg by the time she is 65 in order to have retirement income of $20,000 a year (she expects that Social Security will pay her an additional $15,000 a year). How much will Janine’s IRA be worth when she needs to start withdrawing money from it when she retires? Use Exhibit 1-A.
Explanation / Answer
Answer:-
Years to retirement = 40
Her current IRA = $5,000
Annual growth rate = 8%
Future Value (compounded sum) after 40 years @ 8% growth = $5,000 x 21.725 = $108,625
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.