You want to be a millionaire when you retire in 40 years. You can earn an 11 percent annual return. How much more will you have to save each month if you wait 10 years to start saving versus if you start saving at the end of this month?

Question

Quizplus · Accepted Answer

FVA_{40 years} = $1,000,000 = C F1F1F1S1F1F1F10 [{[1 + (0.11/12)]⁴⁰ F1F1F1S1^F1F1F10¹²; C = $116.28FVA_{30 years} = $1,000,000 = C F1F1F1S1F1F1F10 [{[1 + (0.11/12)]³⁰ F1F1F1S1^F1F1F10¹²; C = $356.57Difference = $356.57 - $116.28 = $240.29

You Want to Be a Millionaire When You Retire in 40