At age 25 someone sets up an IRA (individual retirement account) with an APR of 4%. At the end of each month he deposits $85 in the account. How much will the IRA contain when he retires at age 65? Compare that amount to the total deposits made over the time period.

Question

At age 25 someone sets up an IRA​ (individual retirement​ account) with an APR of 4%. At the end of each month he deposits ​$85 in the account. How much will the IRA contain when he retires at age​ 65?  Compare that amount to the total deposits made over the time period.

I am trying to figure out  after retirement how much $ the IRA will contain

christopher · Accepted Answer

How would I find the total deposit made over the time period?

Reiny · Answer

i = .04/12 = .00333...
n = age(65 - 25) * 12 = 480 payments

You need to use the "amount of an annuity" formula

amount = 85(1.003333...^480 - 1)/.003333...
= 100,466.72

not going to get you very far into retirement. Better increase your payment.

At age 25 someone sets up an IRA​ (individual retirement​ account) with an APR of 4%. At the end of each month he deposits ​$85 in the account. How much will the IRA contain when he retires at age​ 65? Compare that amount to the total deposits made over the time period.

At age 25 someone sets up an IRA (individual retirement account) with an APR of 4%. At the end of each month he deposits $85 in the account. How much will the IRA contain when he retires at age 65? Compare that amount to the total deposits made over the time period.