Asked by Danalakota Santhosh on Jun 02, 2024
Verified
Leona contributed $3,000 per year to her RRSP on every birthday from age 21 to age 30 inclusive. She stopped employment to raise a family and made no further contributions. Her husband, John, started to make annual contributions of $3,000 to his RRSP on his 31st birthday and plans to continue up to and including his 65th birthday. Assuming that both of their plans earn 8% compounded annually over the years, calculate and compare the amounts in their RRSPs at age 65.
Compounded Annually
the process of adding interest to the principal sum of a loan or deposit once every year.
RRSP
A Retirement Savings Plan officially recognized for both working individuals and self-employed people in Canada, designed for saving and investing towards retirement.
Annual Contributions
Regular amounts added to an investment, savings account, or retirement fund once every year.
- Acquire knowledge on the basic principles governing the increment of savings over time via compound interest.
- Understand the implications of compound interest on savings and loans.
Verified Answer
ZK
Zybrea KnightJun 07, 2024
Final Answer :
Leona's RRSP will have $125,616 (24.3%) more than John's RRSP at age 65
Learning Objectives
- Acquire knowledge on the basic principles governing the increment of savings over time via compound interest.
- Understand the implications of compound interest on savings and loans.