1. The amount she need to pay in retirement is $5,000 per year.
2. Lucía will have $318528.83 saved for retirement at age 67.
To know calculate how much Lucía will need in retirement, we will use the rate she saves at per year.
We saves 10% of her current salary.
Retirement Needed = 10% × $50,000
= $5,000 per year.
b. To find out how much she will have at age 67, we can use the future value of an annuity formula.
Lucía saves 10% of her salary annually and we need to calculate this over 27 years (from age 40 to 67) with compound interest.
Future Value (FV) = PMT × [(1 + r)^n - 1] / r,
= 5,000 * [(1 + 0.06)^27 - 1] / 0.06
= 5,000 * 3.8223459407 / 0.06
= 318528.828392
= 318528.83
Full question is:
Scenario 1: Lucía Earns the median salary for a museum curator, $50,000. Is 40 years old and hasn't started saving for retirement yet. Would like to retire at 67, when she can receive full Social Security benefits. 1. If Lucía decides she can set aside 10% of her salary in saving for retirement... a. How much will she heed in retirement? b. How much will she have at age 67?