Ron is 30 years old and is retiring at the age of 65. When he retires, he will need a monthly income of $1,270 for 10 years. If Ron contributes 5% of his monthly income to a 401(k) paying 2.75% compounded monthly, will he reach his goal for retirement given that his monthly income is $1,571.12? If he does not make his goal then state by what amount he will need to supplement his income. Round all answers to the nearest cent.
Answer
A
Ron will meet his monthly goal of exactly $1,270 for retirement.
B
Ron will meet his monthly goal of $1,270 for retirement with an excess of $7.42.
C
Ron will not make his monthly goal of $1,270 and will need $74.16 to supplement his monthly income when he retires.
D
Ron will not make his monthly goal of $1,270 and will need $741.68 to supplement his monthly income when he retires.