Question

You’re looking at your parents’ retirement plans and studying the differences between their saving habits. On her thirty-first birthday, your mother Virginia invested $4,000 into her employer’s retirement plan, and she makes annual $4,000 payments for 9 years, so that her total contribution (principal) is $36,000.00. Your mother then stops making payments into her plan and keeps her money in the savings plan, untouched for 24 more years until retirement at age 63.00. Your father Anthony starts putting money aside on his forty-sixth birthday, when he deposits $2,500, and he continues these annual payments for 18.00 years until he reaches 63.00 years old. Thus, Anthony’s contributed principal amounts to $45000.00 over this period of time. If Virginia’s and Anthony’s retirement plans both earn interest at a rate of 9% per year, compounded annually, then what is the difference in the future value of their savings when your parents turn 63.00? (e.g., FW(Virginia)-FW(Anthony)). Report your answer to the nearest dollar

Answer 1