You Want to Have $1,200,000 When You Retire and You

question 51

Multiple Choice

You want to have $1,200,000 when you retire and you are in a defined contribution plan. You can earn 9% per year on the money invested and you will retire in 25 years. Your employer also contributes to your plan. The employer will contribute 4% of what you put into the plan each year. How much do you have to contribute per year to meet your goal?

• A) $18,435.43
• B) $17,654.87
• C) $16,879.32
• D) $13,622.60
• E) $15,999.44 1,200,000/FVIFA (9%, 25 years) = $14,167.50 total annual payment required. Your contribution must be 14,167.50/1.04 = $13,622.60