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6.4 Savings & Retirement Plans

6.4 Savings & Retirement Plans
  • Math Help

    The interest rates used in Chapter 6 are mainly for illustrative purposes and do not necessarily reflect what is currently available in the U.S. marketplace. You can use an online resource, such as, to investigate current rates.

    To find a balance compounded monthly using your calculator, apply the following steps for the formula

    1. Divide r by 12 and add 1.
    2. Raise to the nth power.
    3. Multiply by P.
    4. Round to the nearest cent.

    On page 284, the formula for the account balance is for interest compounded monthly. The formula for quarterly compounding is

    where n is the number of quarters the interest is compounded. (Note that 3 months = 1 quarter.) The formula for daily compounding is

    where n is the number of days the interest is compounded. The formula for annual compounding is given in the Math Help for page 285.

  • Consumer Suggestion

    If you have kids or plan to have kids in the future you might want to consider purchasing a 529 plan for your child's college expenses. The money you deposit into a 529 is exempt from federal taxes as long as it is used to pay for college expenses such as tuition, or room and board. To learn more about 529 plans, visit the Securities and Exchange Commission website.

    College Savings & 529 Plans

    Find Affordable Online Colleges

  • Checkpoint Solution
    1. The balance on her 18th birthday is

    2. The balance on her 26th birthday is

  • Comments (2)

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    system user
    Jackie (moderator)1 decade ago |
    Why did formerly high-paid athletes end up broke? They mismanaged their money and ended up with no savings.

    Learn more on the andYOU blog:
    system user
    Ron Larson (author)1 decade ago |
    This example reminds me of my great grandparents, all 8 of whom immigrated from Scandinavia in the second half of the 19th century. They were all homesteaders in Minnesota and went through the typical difficult times that American pioneers experienced. And yet, they all had the dream that their children would have an easier time of things than they had had.