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Pat is the type to plan everything in advance, and she is already starting to...

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Accounting

Pat is the type to plan everything in advance, and she is already starting to plan for retirement. She plans to work for 40 years, and then retire for the following 30 years. She expects to spend $120,000 in your first year of retirement, with a 4% growth rate. She will increase her working-years savings rate by 7.5% per year. While working, she expects her account will have a 6.75% return, and during retirement, it will have a 4.75% return. After the 30th year of retirement (end of Year 70), she wants to have $600,000 in her account for safety net and bequest reasons (It is fine if the amount is not exactly $600,000 due to rounding error).

To solve the problem, determine how much Pat needs to save in year 1 to accomplish her retirement goals (use Solver or Goal Seek).

Money that needed to save in Year 1
Spending in Year 41 $120,000.00
Growth rate of spending during retirement 4%
Work year saving rate 7.50%
Investment return during work years 6.75%
Investment return during retirement years 4.75%
Ending balance at year 70 $600,000.00

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