Janine is 25 and has a good job at a biotechnology company. She currently has $5,000 in an IRA, an important part of her retirement nest egg. She believes her IRA will grow at an annual rate of 8 percent, and she plans to leave it untouched until she retires at age 65. Janine estimates that she will need $875,000 in her total retirement nest egg by the time she is 65 in order to have retirement income of $20,000 a year (she expects that Social Security will pay her an additional $15,000 a year). How much will Janine's IRA be worth when she needs to start withdrawing money from it when she retires? Use Exhibit 1-A. (Round time value factor to 3 decimal places and final answer to the nearest whole dollar.)

Janine is 25 and has a good job at a biotechnology company. She currently has $5,000 in an IRA, an important part of her retirement nest egg. She believes her IRA will grow at an annual rate of 8 percent, and she plans to leave it untouched until she retires at age 65. Janine estimates that she will need $875,000 in her total retirement nest egg by the time she is 65 in order to have retirement income of $20,000 a year (she expects that Social Security will pay her an additional $15,000 a year). How much will Janine's IRA be worth when she needs to start withdrawing money from it when she retires? Use Exhibit 1-A. (Round time value factor to 3 decimal places and final answer to the nearest whole dollar.)

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter14: Planning For Retirement

Section: Chapter Questions

Problem 2FPE

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Concept explainers

Retirement Income

Retirement income is the income received by the retiring person after retirement. Income can either be paid every month or paid annually. The retiree would get a guaranteed income until their death. Retirement income payment differs from person to person based on their investment type and payment method. Some are paid on a lump-sum basis and some are paid in a regular series with fixed payment or variable cash flow. Retirement income can be created from retirement savings, investment, salary, bonus, and wages from employment. Every working individual should plan their retirement income according to their income goals for the future. The plan should be made by identifying suitable income sources, estimating future expenses, applying a savings plan, and managing risk and assets. The most common age for retirement is between 60-65 years.

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Janine is 25 and has a good job at a biotechnology company. She currently has $5,000
in an IRA, an important part of her retirement nest egg. She believes her IRA will grow at
an annual rate of 8 percent, and she plans to leave it untouched until she retires at age
65. Janine estimates that she will need $875,000 in her total retirement nest egg by the
time she is 65 in order to have retirement income of $20,000 a year (she expects that
Social Security will pay her an additional $15,000 a year). How much will Janine's IRA be
worth when she needs to start withdrawing money from it when she retires? Use Exhibit
1-A. (Round time value factor to 3 decimal places and final answer to the nearest
whole dollar.)
Future value of IRA
SA

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