What initial principal would you need to invest in the CD account in order to meet
retirement goal of 180,000 at the age of 66?
In order to determine the initial principal needed to meet the retirement goal of $180,000 at the age of 66, we need to consider several factors such as the interest rate and the time period available for investment. Without this additional information, it is impossible to provide an accurate answer.
However, I can provide a general formula to calculate the initial principal needed based on the compound interest formula:
Future Value (FV) = P * (1 + r)^n
Where:
- FV is the future value or retirement goal ($180,000)
- P is the initial principal we need to find
- r is the interest rate (annual percentage rate)
- n is the number of periods (years until retirement)
By rearranging the formula, we can solve for P:
P = FV / (1 + r)^n
Let's consider an example scenario:
Suppose the interest rate is 5% and there are 20 years until retirement.
P = $180,000 / (1 + 0.05)^20
P = $180,000 / (1.05)^20
P ≈ $61,034.02
In this example, an initial principal of approximately $61,034.02 would be needed to meet the retirement goal of $180,000 at the age of 66.