Question

Assuming you have had $55,000 balance in your 401k account and your annual salary is $50,000, suppose from now on your employer will match your deposit in your 401k plan but the amount of match money will be capped by 6% of your salary. If you decide to input 8% of your salary in your 401k plan each month and expect to make 10% return, compounded monthly, at time when you retire, how much money will you have in your 401k account? If you need $1.5 million dollars for your retirement life, based on the above investment in your 401k plan, at what age can you retire to enjoy life?

Requirements: Show calculations and formulas via MICROSOFT EXCEL ONLY:

Here is what I have for my Excel Calculator

Rate = 0.83%

PMT = $583.33

PV = (55,000)

FV= 1,500,000

NPER = ??

Do let me know if I'm going wrong somewhere

Answer 1

Salary 50000

Self contribution 4000

Employer contribution 3000

Total contribution 7000

Monthly contribution 583.33

FV 1500000

PMT 583.33

PV -55000

RATE 0.83%

NPER 305.90 =NPER(0.83%,-583.33,-55000,1.5*10^6,)

Thus ~ 306 months would be required which is 25.50 years