Question

Use the accompanying table to answer the questions regarding money ratios.
(a) What is the capital a 40-year-old should have with an income of $32,000?

(b) How much should a 35-year-old be saving for retirement with an income of $86,000?

(c) How much in education debt should a 30-year-old have with an income of $59,000?


The 40-year-old should have $___in capital.
(Simplify your answer)

(b) The 35-year-old should be saving $ for retirement.

(Simplify your answer)

(c) The 30-year-old should have $___ in education debt.
(Simplify your answer)
.

Answer 1

The 40-year-old should have $76800 in capital. The 35-year-old should be saving $10,320 for retirement.

How to solve for the amounts

The capital that a 40 year old has to have with an income of 32000 is

capital income at age 40 * income

= 2.4 * 32000

Capital = $76800

b. At 35 the savings income has to be

percentage of savings income * income

= 12% * $86000

= $10,320

c. There is no specified value for education earnings.

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