What is the value of your 401(k) if you contribute 5% of your annual income after 30 years? 

To find out the worth of a 401(ok) retirement plan over 30 years, we will use the formulation for the longer term worth of an annuity. On this case, the annuity is the contribution of 5% of the annual earnings, and the rate of interest is the anticipated return on funding.

1. For those who contribute 5% of your annual earnings, which is $54,000 x 5% = $2,700, and the return on funding is 8.0% yearly, then the longer term worth of the 401(ok) after 30 years is $2,700 x (FVIFA 8%,30) = $2,700 x (21.15) = $57,405.
2. If the return on funding is 10.0% yearly, then the longer term worth of the 401(ok) after 30 years is $2,700 x (FVIFA 10%,30) = $2,700 x (38.38) = $103,026.
3. For those who stopped making contributions 5 years earlier, then the longer term worth of the 401(ok) after 25 years could be $2,700 x (FVIFA 8%,25) = $2,700 x (17.20) = $46,840. This can be a distinction of $10,565 in comparison with the longer term worth after 30 years.

In abstract, the longer term worth of the 401(ok) after 30 years is $57,405 if the return on funding is 8.0% yearly and $103,026 if the return on funding is 10.0% yearly. For those who stopped making contributions 5 years earlier, the longer term worth of the 401(ok) could be $10,565 much less.