Problem
An employee's current annual gross wage is $48,200.
Part I: Calculate how much will be needed in retirement if the employee wants to have enough saved to live off 80% of the current annual gross wage and withdraw 4% the first year. Show all steps.
Part II: The employee determines that they can contribute $400 per month to a retirement account with a 5.5% monthly compounded interest rate. Calculate the account balance if the employee plans to retire in 40 years. Show all steps.
Part III: Using your values from Part A and Part B, calculate the difference between the employee's goal and the actual retirement account balance. Explain whether the employee will meet their retirement goal.