Assume your goal in life is to retire with 2 million dollars. How much would you need to save at the end of each year if investment rates average 9% and you have a 15-year work life?

Question

Quizplus · Accepted Answer

Using the future value formula:

FV = PMT x [(1+i)^n - 1]/i

where: 
PMT = amount saved at the end of each year 
i = investment rate = 9% = 0.09 
n = number of years of work life = 15 
FV = future value = $2,000,000

Plugging in the values:

$2,000,000 = PMT x [(1+0.09)^15 - 1]/0.09

Solving for PMT:

PMT = $68,118.

The amount to be saved at the end of each year to retire with $2 million is $68,118.

Assume Your Goal in Life Is to Retire with 2