Erin is a chemical engineer and saves twelve percent of her salary in her 401(k) account with Axis Chemical.

Erin is a chemical engineer and saves twelve percent of her salary in her 401(k) account with Axis Chemical. Axis Chemical makes a 3% match to employees’ 401(k) contributions. Erin earned $80,000 in 2020. In addition to her 401(k) contribution in 2020, Erin also saved $2,400 in a Roth IRA. What is Erin’s savings rate in 2020?

Solutions

Expert Solution

Saving rate = Total Saving / Earning

Total Saving = (12% of 80000) + (3% of 80000) + 2400

Total Saving = 9600 + 2400 + 2400

Total Saving = 14400

Saving Rate = 14400 / 80000 ==> 18%

jeff jeffy answered 2 years ago

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