How Much Do You Need When You Retire to Provide

question 66

Multiple Choice

How much do you need when you retire to provide a $2,500 monthly check that will last for 25 years? Assume that your savings can earn 0.5% a month.

• A) $361,526.14
• B) $388,017.16
• C) $402,766.67
• D) $414,008.24

---

Definitions:

Effective Annual Rate

A measure of interest that accounts for compounding over a year, giving a true reflection of the financial cost or return.

Annual Percentage Rate

The annual rate charged for borrowing or earned through an investment, accounting for all costs.

Interest

The cost of using borrowed money, paid by the borrower to the lender, typically expressed as a percentage of the principal sum per year.

Stated Rate

The annual interest rate of a bond or loan without adjusting for compounding or other factors, often differing from the effective rate or annual percentage rate (APR).