Your Parents' Retirement Goal Calculation

Calculation of Required Annual Interest Rate

Your parents currently have $320,809 saved for retirement and they believe they will need $1,799,335 by the time they retire in 19 years. To find out the annual interest rate they must earn to reach their goal without saving any additional funds, we can use the future value formula for compound interest:

Future Value = Present Value * (1 + Annual Interest Rate)^Number of Years

Plugging in the values we have:

$1,799,335 = $320,809 * (1 + Annual Interest Rate)^19

To isolate the annual interest rate, we need to rearrange the formula:

Divide both sides by $320,809:

$1,799,335 / $320,809 = (1 + Annual Interest Rate)^19

Take the 19th root of both sides:

( $1,799,335 / $320,809 )^(1/19) = 1 + Annual Interest Rate

Subtract 1 from both sides:

( ( $1,799,335 / $320,809 )^(1/19) ) - 1 = Annual Interest Rate

After solving the calculation, the annual interest rate your parents need to earn in order to achieve their retirement goal would be approximately 6.325%.