Sophia's financial goal for retirement is to be able to spend 39,600 per year. If their investments will earn 5.1% per year they want to fund 39 years of retirement, how much money will they need in their retirement account before they can retire

Solution

S o p hi a^{'} s f inan c ia l g o a l f or re t i re m e n t i s t o b e ab l e t o s p e n d 39, 600 p er ye a r . I f t h e i r in v es t m e n t s w i ll e a r n 5.1% p er ye a r t h ey w an t t o f u n d 39 ye a rs o f re t i re m e n t, h o w m u c h m o n ey w i ll t h ey n ee d in t h e i r re t i re m e n t a cco u n t b e f ore t h ey c an re t i re

Amount : 118364.4

Solution steps

Translate the problem into an equation:

A = 39600 (1 + 0.051 \cdot 39)

39600 (1 + 0.051 \cdot 39) = 118364.4

Amount : 118364.4