Question

Jill just turned 30. After consulting a financial planner and laying out her retirement goals, she calculates that she will need to have a balance of $720,000 in her retirement account to supplement Social Security she plans to start collecting when she turns 67 . She plans to start saving immediately and to invest her funds in a market index fund that is expected to have an annual return of Bxi over the 37 years she will be saving money for retirement. How much money does Jill need to save and invest every month in order toKeach the necessary balance in her retirement account by the time she retires at age 67 ? Note: Please enter your answer rounded to the nearest cent. Fon example, if your calculated answer is $215.6684 enter it as: 215.67

Answer 1

To find out how much money Jill needs to save and invest every month to reach the necessary balance in her retirement account, we can use the formula for the future value of an ordinary annuity. The formula is:

FV = P * [(1 + r)^n - 1] / r

Where:
FV = Future value (target retirement balance) - $720,000
P = Monthly savings amount (what we need to find)
r = Monthly interest rate or return
n = Number of periods in months (37 years * 12)

Let's calculate the monthly savings amount:

r = Bxi / 12

Since the annual return is given as "Bxi," we need the actual value or percentage to calculate the monthly interest rate. Please provide that information.