Assume that you are 30 years old today, and that you are planning on retirement at age 65. Your current salary is $45,000 and you expect your salary to increase at a rate of 5% per year as long as you work. To save for your retirement, you plan on making annual contributions to a retirement account. Your first contribution will be made on your 31st birthday and will be 8% of this year's salary. Likewise, you expect to deposit 8% of your salary each year until you reach age 65. Assume that the rate of interest is 7%.

retirement at age 65. $580,563.69

Explanation:

Birth Salary %Incr Incr % Contrib. Cont. N N x Retirement

30 45.000 5%

31 47.250 5% 2.250 8% 3.780 34 1,07 9,9822.450,76

32 49.613 5% 2.363 8% 3.969 33 1,07 9,33 22.031,12

33 52.093 5% 2.481 8% 4.167 32 1,07 8,72 21.619,32

34 54.698 5% 2.605 8% 4.376 31 1,07 8,15 21.215,22

35 57.433 5% 2.735 8% 4.595 30 1,07 7,61 20.818,67

36 60.304 5% 2.872 8% 4.824 29 1,07 7,11 20.429,54

37 63.320 5% 3.015 8% 5.066 28 1,07 6,65 20.047,68

38 66.485 5% 3.166 8% 5.319 27 1,07 6,21 19.672,96

39 69.810 5% 3.324 8% 5.585 26 1,07 5,81 19.305,24

40 73.300 5% 3.490 8% 5.864 25 1,07 5,43 18.944,39

41 76.965 5% 3.665 8% 6.157 24 1,07 5,07 18.590,29

42 80.814 5% 3.848 8% 6.465 23 1,07 4,74 18.242,81

43 84.854 5% 4.041 8% 6.788 22 1,07 4,43 17.901,82

44 89.097 5% 4.243 8% 7.128 21 1,07 4,14 17.567,21

45 93.552 5% 4.455 8% 7.484 20 1,07 3,87 17.238,85

46 98.229 5% 4.678 8% 7.858 19 1,07 3,62 16.916,63

47 103.141 5% 4.911 8% 8.251 18 1,07 3,38 16.600,43

48 108.298 5% 5.157 8% 8.664 17 1,07 3,16 16.290,14

49 113.713 5% 5.415 8% 9.097 16 1,07 2,95 15.985,65

50 119.398 5% 5.686 8% 9.552 15 1,07 2,76 15.686,85

51 125.368 5% 5.970 8% 10.029 14 1,07 2,58 15.393,64

52 131.637 5% 6.268 8% 10.531 13 1,07 2,41 15.105,91

53 138.219 5% 6.582 8% 11.057 12 1,07 2,25 14.823,56

54 145.129 5% 6.911 8% 11.610 11 1,07 2,10 14.546,48

55 152.386 5% 7.256 8% 12.191 10 1,07 1,97 14.274,58

56 160.005 5% 7.619 8% 12.800 9 1,07 1,84 14.007,77

57 168.006 5% 8.000 8% 13.440 8 1,07 1,72 13.745,94

58 176.406 5% 8.400 8% 14.112 7 1,07 1,61 13.489,01

59 185.226 5% 8.820 8% 14.818 6 1,07 1,50 13.236,88

60 194.487 5% 9.261 8% 15.559 5 1,07 1,40 12.989,46

61 204.212 5% 9.724 8% 16.337 4 1,07 1,31 12.746,67

62 214.422 5% 10.211 8% 17.154 3 1,07 1,23 12.508,41

63 225.143 5% 10.721 8% 18.011 2 1,07 1,14 12.274,61

64 236.401 5% 11.257 8% 18.912 1 1,07 1,07 12.045,18

65 248.221 5% 11.820 8% 19.858 0 1,07 1,00 11.820,03

580.563,69