Activity #5 is an individual activity. You should complete it on your own and submit your own assignments individually by Tuesday, March 19th before 10:35AM. Please respond to the following prompts:
Part I: Sally needs to choose between 2 health insurance plans. Assume Sally will use $4,500 worth of medical services this year. Is she better off choosing plan A or plan B? Briefly show your work and explain.
i. Monthly premium: $250
ii. Co-pay: $0
iii. Co-insurance (after deductible): 10%
iv. Deductible: $1,500
v. Max out-of-pocket: $4,000
vi. Monthly premium: $100
vii. Co-pay: $0
viii. Co-insurance (after deductible): 20%
ix. Deductible: $2,500
x. Max out-of-pocket: $8,000
Answer: Sally is better off with Plan _______ because it will cost a total of $______________, which is lower than the total cost of Plan ____ which would be $__________________.
Show your work here:
(a) You are 20 years old and decide to open a retirement account. You contribute $1,000 every month for the next 35 years and invest it in the stock market (you buy indexes, not individual stocks!). Assuming you earned an annual growth rate of 10% on your investments, how much money do you think you’ll have saved when you are 55 years old?
Answer II(a): I think I’ll have around $_____________________ saved for retirement at 55 under the circumstances described above.
(b) Now use the following online calculator to get the answer. Assume you are saving in a tax-deferred account and $0 starting assets: https://money.cnn.com/tools/savingscalc/savingscalc.html. (Links to an external site.)Links to an external site.
Answer II(b): Under the circumstances described above, I will have $__________________________ saved for retirement when I am 55 (you can report either the inflation-adjusted figure or the non-adjusted figure).
(c) Watch the following video: It's a Money Thing // Compound Interest Mind Bend (Links to an external site.)Links to an external site.
Answer III(c): What is one insight from the above video? _______________________________________________
Note: check out https://money.cnn.com/tools/ (Links to an external site.)Links to an external site. for other “cool” calculators that may be helpful for “adulting”