2
QuizMultiple Choice

Retirement Savings Options

Question 2 • 26-27 Ignite Financial Literacy Personal Finance - EL3403

Will is 30 years old and works for a company that matches his 401(k) contribution up to 3%. The interest rate for his 401(k) is 7.13%. If he puts away 9% of his $41,000 salary every year, how much would he have saved in 10 years? Round your answer to the nearest cent.

Answer
A
$52,835.72
B
$56,602.91
C
$68,395.76
D
$73,272.37

Explanation

Will contributes 9% of $41,000, or $3,690 each year. His employer adds a match of 3% of his salary, or $1,230, making the total annual contribution $4,920. Using the future value of an ordinary annuity, $4,920 × [(1.0713¹⁰ − 1) ÷ 0.0713] gives about $68,395.76. The correct choice is C, $68,395.76.

AI-written and checked against the verified answer.

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