You are going to deposit $3,000 a year into an IRA from the ages of 25 to 35 (10 years). You will then let your investment sit in the account for 30 years until you retire at age 65. Your IRA will earn 7% interest. How much will you have at age 65? HINT: you must make two calculations here. The first step is to figure out the Future Value (FV) of the $3,000 annuity. The second step is to take that FV answer, which is now a lump sum, and determine its FV 30 years down the road at 7% interest.

Your twin sister has decided to wait until she is 35 to start saving. She is going to deposit $3,000 a year into an IRA from ages 35 to 65 (30 years). Her IRA will also earn 7% interest. How much will she have at age 65?

Who has more money at age 65you or your sister?