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Retirement planning Hal Thomas, a 25-year-old college graduate, wishes to retire
at age 65. To supplement other sources of retirement income, he can deposit $2,000
each year into a tax-deferred individual retirement arrangement (IRA). The IRA will
earn a 10% return over the next 40 years.
265-25=)
a. If Hal makes annual end-of-year $2,000 deposits into the IRA, how much will he
have accumulated by the end of his sixty-fifth year?
- b. If Hal decides to wait until age 35 lê begin making annual end-of-year $2,000
deposits into the IRA, how much will he have accumulated by the end of his
sixty-fifth year?
c. Using your findings in parts a and b, discuss the impact of delaying making
deposits into the IRA for 10 years (age 25 to age 35) on the amount accumulated
by the end of Hal's.sixty-fifth year.
d. Rework parts a, b, and c, assuming that Hal makes all deposits at the beginning,
rather than the end, of each year. Discuss the effect of beginning-of-year deposits
on the future value accumulated by the end of Hal's sixty-fifth year.
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