Bob and Lisa are both married, working adults. They both
plan for retirement and consider the $2,000 annual contribution a must.
First, consider Lisa’s savings. She began working at age 20
and began making an annual contribution of $2,000 at the first of the year
beginning with her first year. She makes 13 contributions. She worked until she
was 32 and then left full time work to have children and be a stay at home mom.
She left her IRA invested and plans to begin drawing from her IRA when she is
Bob started his IRA at age 32. The first 12 years of his
working career, he used his discretionary income to buy a home, upgrade the family
cars, take vacations, and pursue his golfing hobby. At age 32, he made his
first $2,000 contribution to an IRA, and contributed $2,000 every year up until
age 65, a total of 33 years / contributions. He plans to retire at age 65 and
make withdrawals from his IRA.
Both IRA accounts grow at a 7% annual rate. Do not consider
any tax effects.
Write a two to three (2-3) paragraph summary in which you:
Create a chart summarizing the details of the investment for
both Bob and Lisa.
Explain the results in terms of time value of money.