James Perkins wants to have a million dollars at retirement, which is 15 years away. He already has $200,000 in an IRA earning 8 percent annually. How much does he need to save each year, beginning at the end of this year to reach his target? Assume he could earn 8 percent on any investment he makes. (Round to the nearest dollar.)

Question

Quizplus · Accepted Answer

To find the annual savings needed, calculate the future value of the current $200,000 and subtract it from $1,000,000. Then, use the future value of an annuity formula to find the annual savings required to make up the difference. The correct calculation results in approximately $13,464.

James Perkins Wants to Have a Million Dollars at Retirement