Create a chart summarizing the details of the investment for both | FIN 100 Principles of Finance | Strayer University

 

Larry and Beth are both married, working adults. They both plan for  retirement and consider the $6,000 annual contribution a must.

First, consider Beth’s savings. She began working at age 20 and  began making an annual contribution to her IRA of $6,000 each year until  age 32 (12 contributions). She then left full-time work to have  children and be a stay-at-home mom. She left her IRA invested and plans  to begin drawing from her IRA when she is 65.

Larry started contributing to his IRA at age 32. In the first 12  years of his working career, he used his discretionary income to buy a  home, upgrade the family cars, take vacations, and pursue his golfing  hobby. At age 32, he made his first $6,000 contribution to an IRA and  contributed $6,000 every year up until age 65 (33 contributions). He  plans to retire at age 65 and make withdrawals from his IRA.

Both IRA accounts grow at an 8 percent annual rate. Do not consider taxes or inflation.

Instructions

  • Create a chart summarizing the details of the investment for both Larry and Beth.
  • Write a one-paragraph summary in which you explain the results  in terms of the time value of money for both Larry and Beth. (Hint:  discuss why one person was able to save a great deal more than the  other.)
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