Twins, Megan and Melissa, graduated from Northeastern and began working at age23. Megan decided to put $2,000 per year into a retirement account for 10 years,planning to stop at that time to raise a family. She made no additional contributionsuntil she retires at the age of 67. Melissa did not begin making contributions to herretirement account until she was 33, ten years later, and then continued to makecontributions of $2,000 each year until she reached her normal full retirement age of67. In both cases all contributions were to be made at the end of the year, and bothearned 10% on their money.

 

1. How much did Megan contribute in total and how much will she have whenshe retires at 67?
2. How much did Melissa contribute in total and how much will she have when she retires at 67.
3. How do you explain the difference?