Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A 3 5 year 3 5 - year - old old employee who has just been hired will contribute part of their paycheck monthly to

A 35 year35-year-old old employee who has just been hired will contribute part of their paycheck monthly to a 401(k). The employee's starting salary is $85000 a year. An annual raise of 5.66% is given to every employee each year. The employee plans to work for the company until they retire at age 66 and start withdrawing from their 401(k)20% of their ending salary each year they are retired. The employee expects to be retired for 25 years. They will withdraw the money in monthly installments. The 401(k) earns 7.46% per year compounded monthly. a) How much will the employee's final salary be at age 66? Round to two decimals. b) Using your answer to part a), how much will the employee withdraw each month of their retirement? Round to two decimals. c) Using your answer to part b), how much does the employee needs to save in their 401(k) before they retire at age 66? Round to two decimals. d) Using your answer to part c), how much do the employee's monthly 401(k) contributions need to be? Round to two decimals. e) Using your answers to part c) and d), how many years would it take the employee to save the money they need to retire if they doubled their monthly contributions? Round to two decimals.parts

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Public Finance And Public Policy

Authors: Jonathan Gruber

6th Edition

1319105254, 9781319105259

More Books

Students also viewed these Finance questions

Question

How do you add two harmonic motions having different frequencies?

Answered: 1 week ago

Question

=+Could you use an ambient ad?

Answered: 1 week ago