Molly starts an IRA (Individual Retirement Account) at the age of 24 to save for retirement. She deposits $400 each month. The IRA has an average annual interest rate of 7% compounded monthly. How much money will she have saved when she retires at the age of 65? Round your answer to the nearest cent, if necessary.

To determine how much Molly will have saved by the time she retires at age 65, we can use the formula for the future value of an annuity with monthly compounding:

\[
A = P \times \left( \frac{(1 + r/n)^{nt} - 1}{r/n} \right)
\]

Where:
- $A$ is the future value of the annuity (the total amount saved),
- $P$ is the monthly deposit amount,
- $r$ is the annual interest rate (in decimal form),
- $n$ is the number of times the interest is compounded per year (monthly compounding means $n = 12$),
- $t$ is the number of years the money is saved.

Given:
- $P = 400$,
- $r = 7\% = 0.07$,
- $n = 12$,
- $t = 65 - 24 = 41$ years.

Let's compute the future value.Molly will have saved **$1,130,781.58** by the time she retires at the age of 65.

Would you like further details on this calculation or have any questions?

Here are 5 related questions for further exploration:
1. How would the final amount change if the interest rate were 8% instead of 7%?
2. What if Molly started saving at age 30? How much would she have at retirement?
3. What would happen if she contributed $500 instead of $400 monthly?
4. How much would be saved with quarterly compounding instead of monthly?
5. What portion of the final amount comes from interest versus principal?

**Tip:** Consistent savings combined with compound interest can greatly amplify retirement funds over time.

Molly starts an IRA (Individual Retirement Account) at the age of 24 to save for retirement. She deposits $400 each month. The IRA has an average annual interest rate of 7% compounded monthly. How much money will she have saved when she retires at the age of 65? Round your answer to the nearest cent, if necessary.

Discover how to calculate the future value of an IRA with monthly contributions of $400 and a 7% annual interest rate compounded monthly. Learn step-by-step how Molly's savings grow from age 24 to 65, covering key concepts like compound interest and annuities.

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