Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Show work on paper? Today, you celebrated your 24th birthday. You accepted a new job with a Fortune-500 company in Cincinnati. The firm provides you

Show work on paper?

Today, you celebrated your 24th birthday. You accepted a new job with a Fortune-500 company in Cincinnati. The firm provides you a 401-k plan, and your contribution are expected to be: $300 every month for first 11 years. After that, you increase your contribution by $300/month (your new contribution is $600/month) and stay at that level for next 15 years. After that, you increase your contribution by an additional $400/month (your new contribution is $1,000/month) and stay at that level for next 15 years, until your 65th birthday. The company matches your contribution at 75% and matched deposits are made once a year. The account provides interest at 5.4% per year compounded monthly. You want to retire on your 65th birthday, and you stop contributing to the 401-k plan. You determine that your monthly income needed for a retired lifestyle is $12,000 of which Social Security will provide $3,000. So, you need a net of $9,000 per month until age 90. The 401-k account will continue to pay interest at the same rate even during your retirement years. Is your current plan regarding the monthly deposits to 401-k sufficiently large to meet your retirement needs? If the deposits are insufficient, by how much additional money should you save per month to be deposited to a new account that is different and separate from 401-k, that pays the same interest? On the other hand, if your contribution is sufficient, how much money will you have in the account at age 90?

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

Understanding Cryptocurrencies Bitcoin Ethereum And Altcoins As An Asset Class

Authors: Ariel Santos-alborna

1st Edition

1637420994, 978-1637420997

More Books

Students also viewed these Finance questions

Question

Describe three characteristics common to all projects.

Answered: 1 week ago