Your friend, currently 22 years old, is wondering whether he should start contributing to his Roth IRA starting this year, or wait until he's 32 and hopefully making more money. Help your friend out. If he can contribute $5,309 per year, starts this year and continues until his retirement at 65, what percentage of the final value of the IRA by the time he is 65, will come from the first 10 years of contributions? He plans to invest in an equity index fund with historical average rate of return of 8.11 %. Assume that the contributions are annual at the end of each year. Figure out how much pre-tax income you need, subtract expected retirement income, then adjust for inflation

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To calculate what percentage of the final value of the Roth IRA at age 65 will come from the first 1... View the full answer