Sandra is 30 years old, will work 35 more years, and then retire. Her salary thi

Question

Sandra is 30 years old, will work 35 more years, and then retire. Her salary this year is $80,000, and it will grow at a 4% annual rate. Sandra will invest an amount equal to 8% of her salary at the end of each year in a 401(k) account. Her investments will earn 7% annually. Create a spreadsheet that will address Sandra’s questions. A. What will be Sandra’s salary and IRA value at the end of year 35? To retire, Sandra feels she needs a portfolio worth 10 times her salary. Will she achieve that goal? B. What contribution rate would be necessary for Abe to achieve her goal?

Explanation / Answer

After 35 years her salry will be=

apparisal amt after 35 years= 80000(1+4%)35

   =$315687

Total salary after 35 years= $315687

$2,048,065 after 35 years

No she will not achieve her goal.

Contribution rate= 800000X100

80000X35

=28.57%

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