Answer:
Explanation:
To calculate the future value of the IRA account, we can use the formula for the future value of an annuity:
FV = PMT × (((1 + r)^n - 1) / r)
where FV is the future value of the account, PMT is the monthly payment, r is the monthly interest rate, and n is the number of months.
The monthly interest rate can be calculated by dividing the annual percentage rate (APR) by 12. In this case, the monthly interest rate is:
r = APR / (12 x 100) = 6% / (12 x 100) = 0.005
The number of months that the account will be active is:
n = (65 - 20) x 12 = 540
where 65 is the retirement age and 20 is the current age.
The monthly payment is $55.
Plugging these values into the formula, we get:
FV = $55 × (((1 + 0.005)^540 - 1) / 0.005) = $163,883.62
Therefore, the IRA account will contain approximately $163,883.62 when the person retires at age 65, assuming no additional contributions or withdrawals are made and the interest rate remains constant.