Question
Rebecca starts a new job tomorrow that will pay her $90,000. She has been out of the workforce for the past five years but has
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Rebecca starts a new job tomorrow that will pay her $90,000. She has been out of the workforce for the past five years but has money invested in an Roth IRA with a balance of $75,000. Rebecca's new employer will match her 401k contributions dollar-for-dollar up to the first 5% of her income that she contributes. She plans to contribute only enough to the 401k plan to maximize the company match, but she will also contribute the maximum amount ($6,000 annually in 2021) to her Roth IRA. How much will Rebecca have in her retirement investments (including the IRA) when she retires in 15 years if she adds to her retirement accounts on a monthly basis and earns 7% annually on her investments?
HINT: Start with determining the following pieces of information. (1) What does she have today (PV)? (2) What is she investing monthly into the Roth? (3) What is she investing monthly into the 401k? (4) What is the company matching monthly in the 401k?
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