Deniece has accumulated $50,000 in her thrift savings plan at her job at the Fed

Question

Deniece has accumulated $50,000 in her thrift savings plan at her job at the Federal Aviation Administration. The government puts in 1% of her pay and matches up to another 4% if she puts in 5% out of her pay. Deniece earns $80,000 a year and plans to add 5% from her income plus the agency 5% for a total of $8,000 per year. Her cousin Eugene says that if she invests in stocks, she can earn 12% per year because that has been the long term history.   How much will she have in 25 years at retirement if she can earn 12% per year compounded annually?

Explanation / Answer

Accumulated Fund $50,000.00 Nper years 25 Rate 12% Future value =50000 x (1+ 12%)^25 $850,003.22 Payment Per Year 8000 Nper years 25 Rate 12% Future value of payments $1,066,670.96 Total Funds at the retirement = $850,003.22 + $1,066,670.96 $1,916,674.18

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