Bart and Lisa Simpson both work at the Springfield DMV and have decided to start saving for retirement, which is 40 years away. They’ll both receive a 7 percent annual return on their investment over the next 40 years. Lisa invests $4,500 per year at the end of each year only for the first 10 years of the 40-year period. Bart doesn’t start saving for 10 years and then saves $4,500 per year at the end of each year for the remaining period of time
Question 1
How much will Lisa have when she retires? Note: this question requires you to do two sets of calculations. Do not round until the end.
Question 2
How much will Bart have when he retires?
Question 3
How much would Bart need to save each year if he wants to “catch-up” to Lisa (how much will he need to save so that he has the same amount at retirement as Lisa)?