To calculate how much you would need to deposit each month to reach $300,000 for retirement in 35 years with a 5% interest rate, you can use the formula for monthly payments in a savings plan.
Here's how you can calculate it step by step:
1. Identify the key information:
- Future value (FV) = $300,000
- Time period (n) = 35 years
- Interest rate (r) = 5% or 0.05 (in decimal form)
2. Use the formula for calculating monthly payments in a savings plan:
\[ PMT = \frac{FV \times r}{(1 + r)^{n} - 1} \]
3. Substitute the values into the formula:
\[ PMT = \frac{300,000 \times 0.05}{(1 + 0.05)^{35} - 1} \]
4. Calculate the monthly payment:
\[ PMT = \frac{15,000}{(1.05)^{35} - 1} \]
5. Solve the equation to find the monthly payment amount you would need to deposit to reach $300,000 for retirement in 35 years with a 5% interest rate.
