If an individual or family began at age 25 paying funds into a tax-free investment account or pension earning a 7 percent real return, how much would they have to save annually in order for the funds to be worth a million dollars (measured in the purchasing power of today's dollar) when they reach age 65?

Question

Quizplus · Accepted Answer

Using the future value of an annuity formula, saving approximately $5,000 annually at a 7% real return over 40 years will accumulate to about a million dollars in today's purchasing power.

If an Individual or Family Began at Age 25 Paying