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 $50 at the end of each month into a retirement account paying 8.5% compounded weekly for 12 years starting on January 1, 2043. After 12 years, you do not make any more payments or withdrawals and leave the money in the retirement account until retirement. Show all work and answer the following questions:

1. Assuming no withdrawals or additional payments were made, how much money will be in your retirement account after 12 years?
2. After 12 years, how many years are left until you retire?
3. Assuming you made all the monthly payments for 12 years and left the money in the account without making any additional payments or withdrawals, how much money will be in your retirement account after 26 years?
4. Assuming you made all the monthly payments for 12 years and left the money in the account without making any additional payments or withdrawals, how much did you pay into your retirement account over the 26 years?
5. Assuming you made all the monthly payments for 12 years and left the money in the account without making any additional payments or withdrawals, how much interest did you earn over the 26 years?

Answer rating: 100% (QA)

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