Suppose that youd like to retire in 40 years and you want to have a future value of $ 1000000 in a savings account. Also suppose that your employer makes regular monthly payments into your retirement account. If you can expect an APR of 7.5% for your account, how much do you need your employer to deposit each month?

Employer Contribution =

The formulas we have been using assume that the interest rate is constant over the period in question. Over a period of 40 years, though, interest rates can vary widely. To see what difference the interest rate can make, lets assume a constant APR of 2% for your retirement account.

How much do you need your employer to deposit each month under this assumption? Employer Contribution =