Assume that your selected job has a retirement plan that allows you to save for 43 years.
If 10% of your monthly income is put into a retirement account, how much should you expect if the average
annual return is 8.25%? Be sure to show and explain the Excel formula you used.
Using the same conditions, determine the amount a high school graduate should expect to have in their
retirement account? Be sure to show and explain the Excel formula you used.
Use an absolute or relative change statement to compare the retirement accounts of the high school
graduate and yourself.
Include some final observations about saving for retirement. Does the amount that the college graduate
saves after 43 years enough to live off of to keep your standard of living? Are there things not taken into
consideration when calculating the retirement amount in the college graduate’s account?
Sample Solution
Excel formula used: =(Monthly Income * 10%)*((1+ 8.25%)^43)
For an individual making $2,000 a month and using the above formula to calculate their retirement account balance after 43 years, they should expect to have approximately $3,556,186.45 in their retirement account with an average annual return of 8.25%.