If you made $3,000 a year in contributions to your retirement account starting at the age of 25, making an average of 8% annual return, how much will you have at the age of 65?
amount = 3000(1.08^40 - 1)/.08
= ....
To figure out how much you will have in your retirement account at the age of 65, you can use the formula for compound interest. The formula is:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the investment/retirement account
P = the initial contribution/amount invested ($3,000 in this case)
r = the annual interest rate (8% in this case)
n = the number of times the interest is compounded per year (assuming it's compounded annually, n = 1 in this case)
t = the number of years (65 - 25 = 40 in this case)
Plugging in the values into the formula, we can calculate the future value of your retirement account:
A = 3000(1 + 0.08/1)^(1*40)
A = 3000(1 + 0.08)^40
A = 3000(1.08)^40
A ≈ 3000(6.848)
A ≈ $20,544
So, you will have approximately $20,544 in your retirement account at the age of 65 if you continue to contribute $3,000 per year and earn an average annual return of 8%.