Question Ben and Abe recently graduated from College. Each was 22 years old and began working in their chosen career path. The both realize that it's important to save for retirement.
Abe decided to begin saving for his retirement immediately. He begins saving $2,000 each year for the next 10 years. At age 32 he stops making annual deposits but allows the money that he's saved to continue to grow in the retirement account until he is 62 years old. He will then retire at age 62.
Ben does not begin saving for retirement until he is 32 years old. At age 32, he begins investing $2,000 into a retirement account and continues making annual deposits until he is 62 years old. At age 62 he retires.
Assume that both Abe and Ben earned a 10% annual interest on their savings which was compounded annually.
1. What is the balance in Abe's account at age 62?
2. How much did Abe invest in his account during the 10 years that he saved?
3. What is the balance in Ben's account at age 62?
4. How much did Ben invest in his account during the 30 years that he saved?
5. Why is Abe's account larger than Bens account?