Question

Suppose we lived in a society without interest. At age 25, you begin putting in $750 per month into a cookie jar until you retire at age 65. At age 65, you begin to withdrawl 2500 per month from the cookie jar. How long will your retirement fund last?

Answer 1

the retirement fund would last 12 years

Explanation:

first we find the amount of years one will be saving money by subtracting the age one will start saving money from the age one would start using the money.

65 - 25 = 40 years

next will be finding the amount of dollars one would save every year, we do that by multiplying the money one is saving every month by 12 (a year).

12 × 750 = 9,000 dollars per year

then we multiply the amount of money one would save per year by the amount of years one will be saving money in, to find how many dollars one would save in 40 years.

9,000 × 40 = 360,000 dollars in 40 years

-

after that we divide the amount one would have saved by the $2,500 one would use every month to find the amount of months the money would last.

$360,000 ÷ $2,500 = 144 months

to find how many years the money would last, one would divide it by 12, which is the amount of months per year.

144 ÷ 12 = 12

Answer 2

It will last 12 years. So it'll last till he's 77 years old at the rate he's pulling it out.

Explanation:

1. You need to find the difference in the ages. so we need to find out how long he's been saving in the 1st place. 65 - 25 = 40 years
2. We now need to covert that 40 years into months. 40 × 12 = 480 months
3. In order to know how much money he saved over that 40 years or 480 months times that by 750. 480 × 750 = 360,000
4. Now we know over the course of 40 years he managed to save 360,000$ when he was putting in 750 a month. Now since he's retired he's taking out 2500 a month and we need to know how long it'll last.
5. So to find out how long the 360k will last if taken out of 2500 increments just divide that rate but the total !! 360,000 ÷ 2500 = 144
6. It will last him 144 months, now convert this number back to years. 144 ÷ 12 = 12 years
7. So now we know it'll last him for 12 years ! and if u add 12 to 65 you'll get 77, so in 12 years he'll be 77!!

This is why it'll last him 12 years, which he'll be 77 by that time !! I hope this helped !!