How much will you have in your savings account

Reference no: EM132181793

Question - You land your dream job, but it does not provide a pension plan for you, so you must take care of this for yourself. You currently make a net salary of $110,000, and you are paid bi-weekly. You decide that you will be able to put away 35% of your earnings, which you anticipate will grow 0.02% bi-weekly for the remainder of your life. Ignore taxes and assume for simplicity that your earnings grow equally every pay period starting after your first pay.

Your bank quotes you a savings rate of 6% with weekly compounding and you will work for 28 years at this same job (you really love it)

a. How much will you have in your savings account if you start saving when you receive your first pay and continue to save until the day you retire?

b. How much will you have in your account if you delay starting to save for 5 years?

c. Assume that you save for the first 12 years alone and make no other deposits to your savings account until you retire. How much will be in your account when you retire?

d. Assume that you only save during the final 8 years of employment. How much will be in your account when you retire?

e. Assume that you save during the first 4 years and last 12 years of employment, with no savings in between. How much will you have when you retire?

Reference no: EM132181793

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