Reference no: EM132632631

Having enough money to cover retirement is critical to one's comfort and dignity later in life. This exercise is designed to get you thinking about how much you should be saving for retirement. It gives you the chance to apply what you learn from Chapter 5 on the value of compounding interest. It also will give you a chance to get some practice with your TI BA II Plus calculator.  need to follow a series of steps and provide your output to each question. Then discuss your plan to save and invest for retirement.

1. Calculate how many months until you turn age 65

2. Assume a 0.7974% monthly rate of return (which if annualized = 10%). While being lower than the historic average for equities, it gives you room to reduce risk, particularly as you approach retirement.

3. Calculate the future value of your retirement if you invest $150 per month (or $50 per pay check with a $0.50 per dollar employer match)

4. Calculate the future value of your retirement if you invest $300 per month (or $100 per pay check with a $0.50 per dollar employer match)

5. How much more would you have to invest per month to achieve the future value in point 4 and retire by age 50. I realize you cannot withdraw from an IRA, 401K, or most retirement accounts until at least age 59 and a half, but assume age 50 for this analysis.

6. Provide a summary of your plan for retirement. How much do you plan on investing every month? What do you plan on investing in? And when do you hope to retire?