Sarah is looking to structure her retirement plan. She currently has $400,000 saved up and is looking to retire in 15 years
when she is 55. Given the following information below, calculate the pre-retirement rate of return that she
would need to achieve if she were to contribute $10,000 a year (starting today and for the next 14 years)
to meet her goal of retiring when she is 55. SHOW YOUR WORK FOR ALL PARTS OF THE CALCULATION!
You do not need to construct a table
1) Her life expectancy is 85 years old
2) Based on needs-based analysis, she will need $55,000 a year in today's dollars to live on in her first year of retirement
3) Assume that her living expenses (withdrawals) increase at the rate of inflation
4) Assume 3.00% inflation, 7.0% return in retirement
5) Assume that all payments and withdrawals are made at the beginning of the year
6) Assume that all contributions are constant (they do not increase with inflation)
Sarah - Retirement
Money Saved up	$400,000
Inflation	3.00%
Annual Payment	$10,000
Post Rate of Return	7.00%
Years to Retire	15
Years in Retirement	30
Living Expenses	$55,000