Company benefits 401K
Your younger brother, Tom, just received information from
his company on his benefits. He tells you that he is not interested in reading
the retirement information because he has another 30 years of working before he
can even consider retiring. You take a look at the information and see that his
company offers a great 401(k) plan that matches contributions up to 6% and has
been offering an average return of 12% annually. At this time Tom is making $30,000
per year and receives an average raise of 3% per year.
Individually: Prepare a spreadsheet for Tom that shows how
much money he could expect to have in his retirement account in 30 years given
the following scenarios:
1. He takes advantage of the 401(k) plan offered by his
employer by putting 6% in the plan for the next 30 years. (Assume that the plan
will continue to earn 12% annually).
2. He waits 10 years to begin putting 6% of his salary in
the plan.
