Suppose that you plan to retire at 65. You invest $8,000 per year on your birthday for 10 years starting on your 25th and ending on your 34th birthday. Since you are young, you take more risks with your investments, and earn a rate of return of 12%. Then, you have children and decide to put all your retirement savings into investing in a college fund for them. You leave all accumulated funds in the retirement account, and it earns 6% per year, reflecting an (unwise) rise in caution during middle age. How much money will you have to retire on at 65 (31 years after you stop contributing)
Suppose that you plan to retire at 65. You invest $8,000 per year on your birthday for 10 years starting on your 25th and ending on your 34th birthday. Since you are young, you take more risks with your investments, and earn a rate of return of 12%. Then, you have children and decide to put all your retirement savings into investing in a college fund for them. You leave all accumulated funds in the retirement account, and it earns 6% per year, reflecting an (unwise) rise in caution during middle age. How much money will you have to retire on at 65 (31 years after you stop contributing)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Suppose that you plan to retire at 65. You invest $8,000 per year on your birthday for 10 years starting on your 25th and ending on your 34th birthday. Since you are young, you take more risks with your investments, and earn a
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