Question

Mike currently 35, has $15,000 saved for retirement. He is currently saving $450 at the beginning of every month and his employer matches his total savings contribution on a monthly basis. Mike projects that he could earn 7% on his savings. He plans to retire at 65 and expects to live until age 90. His current expenditure on basic needs at the beginning of every month is $2200 every month which is expected to increase with inflation of 4%.

What would be the value of Mike’s savings (including employer’s contribution) at the age of 65?

		$1,560,601
		$1,219,721
		$1,556,859
		$1,226,126

Answer 1

Correct answer: $1,226,126

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

в $15,000 $450 $450 $900 Current Balance of savings Monthly contribution of Mike Employers contribution Total monthly contribution Current age Retirement age Years until retirement No. of monthly contributtion in 30 years Annual interest rate Monthly interest rate 0.58% Value of Mike's saving at age of 65 $1,226,126 15

Cell reference -

15000 450 450 =SUM(C3:04) 35 Current Balance of savings Monthly contribution of Mike Employers contribution Total monthly contribution Current age Retirement age Years until retirement No. of monthly contributtion in 30 years Annual interest rate Monthly interest rate 65 =C7-C6 =30*12 0.07 =C10/12 Value of Mike's saving at age of 65 =FV(C11,C9,-C5,-C2,1) 14 15.

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