Today is your 21stbirthday and you just decided to start saving money so you can retire early. Thus, you are going to save $500
a month starting one month from now. You plan to retire as soon as you can accumulate $1 million. If you can earn an average of 8 percent on your savings, how old will you be when you retire?
1 answer:
Answer:
54.39 years
Explanation:
For computing the age at the time of retirement, first we have to determine the number of years by applying the NPER formula which is attached on the spreadsheet.
Given that,
Present value = $0
Future value = $1,000,000
Rate of interest = 8% ÷ 12 = 0.66667%
PMT = $500
The formula is shown below:
= NPER(Rate;PMT;PV;-FV;type)
The future value come in negative
So, after solving this, the number of year is
= 400.7439346252 ÷ 12 months
= 33.39 years
Now the retirement age is
= 33.39 years + 21 years
= 54.39 years
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