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.
The solution provides a detailed spreadsheet that shows how much money Tom could expect to have in his retirement account in 30 years given two different scenarios.