You have just turned 21. You don't plan to save anything towards retirement for the first five years. Once you turn 26 you will start saving $300 per month towards retirement until you turn 36, at which point you plan to up your contributions.

If you plan to retire at age 66, and would like to have enough money at that point to be able to withdraw $60,000 per year to live on (you assume you want just enough to live 25 more years), How much must you set aside monthly from 36 to 66? Assume that you can earn an APR of 6% with monthly compounding on your savings.

Answer rating: 100% (QA)

To solve this problem we can use the future value formula FV PV 1 rn where FV is the future value PV ... View the full answer