A self-employed person deposits $3,000 annually in a retirement account (called a Keogh or H.R.10 plan) that earns 8 percent. How much additional money will be in the account if the saver defers retirement until age 70 and continues the contributions?
A person is self-employed if the person hires himself or herself as the only employee. In the United States, self-employed individuals account for roughly 8 percent of the total labor force.
Answer and Explanation: 1
The amount the person will have is the future value of the annual contributions, which are an annuity. We can use the following formula to compute the...
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fromChapter 21 / Lesson 15
An annuity is a type of savings account that pays back the investor in the future. Learn the formula used to calculate an annuity's value, and understand the importance of labeling specific numbers to calculate an output over time.