16. Rob and Mary are the same age. At age 25 Mary began saving $2,000 a year while Rob saved nothing. At age 50, Rob realized that he needed money for retirement and started saving $4,000 per year while Mary kept saving her $2,000. Now they are both 75 years old. Who has the most money in his or her retirement account?
a.) They would each have the same amount because they put away exactly the same
b.) Rob, because he saved more each year
c.) Mary, because she has put away more money
d.) Mary, because her money has grown for a longer time at compound interest. Rob, if he knows Mary, understands what far too many Americans realize too late. The question leaves out numerous questions and roadblocks that tumble our way and Mary may have been fortunate enough to maintain the discipline needed to stay with her plan. Rob will attempt to play catch-up but will never reach the same level of savings as Mary achieved.
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