You Are Saving for Retirement

question 32

Multiple Choice

You are saving for retirement.To live comfortably,you decide that you will need $2.5 million by the time you are 65.Today is your 30th birthday,and you decide,starting today,and on every birthday up to and including your 65th birthday,that you will deposit the same amount into your savings account.Assuming the interest rate is 5%,the amount that you must set aside each year on your birthday is closest to:

• A)$71,430.
• B)$27,680.
• C)$26,100.
• D)$26,260.

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Definitions:

Untaxed Income

Income that is not subject to taxation by the authorities.

1040EZ Form

A simpler version of the IRS tax form for individuals with straightforward financial situations, no longer in use as of the 2018 tax year.

Single

Filing status for unmarried taxpayers that is indicated on tax forms which determine the tax rate paid.

Married Filing Jointly

Filing status for married taxpayers who chose to fill out separate income tax returns.