FIN 410: Retirement Planning Project 1: Capital Needs Analysis Learning Objectives: 1. Understand the changing retirement system (including Social Security) and be able to acknowledge the importance of lifestyle needs, age, and gender in retirement planning. 2. Demonstrate the ability to perform time value of money calculations that relate to savings and retirement planning. Use only your calculator (or equivalent app) and show your inputs on each calculation. This allows me to award partial credit if necessary. Before attempting this project, | recommend rereading pages 52-56. Practice the annuity method outlined on page 54. Please have realistic expectations for responses, questions asked the day before the due date may be missed, so be proactive. Client Background: Your new client is Michaela Stirling, an energetic 57-year-old widower with a love for travel and a methodical approach to life planning. As she prepares for retirement, she envisions a future rich with adventures and new opportunities. Her desired retirement age is 67, and she aims to enjoy her golden years until a projected life expectancy of 95. Currently, Michaela's annual expenses are $75,000, covering her daily needs and occasional luxuries. She anticipates this will grow to not change. She has been carefully managing her finances and has amassed retirement savings of $405,000, which she has nurtured over the years. However, Michaela's aspirations extend beyond her personal comfort. With a strong commitment to philanthropy, she dreams of leaving a lasting legacy by donating $2.000,000 (o her alma mater and other charitable organizations at her passing. Amidst her goals, Michaela is also considering the impact of Social Security benefits on her retirement plan. She is aware her full retirement age for Social Security is 67, at which point she could receive a benefit of $24,000 (in today's dollars). Considering various scenarios, Michaela is contemplating the possibility of retiring at 67 and incorporating Social Security benefits from that age onward. Balancing her desire for a fulfilling retirement and a meaningful legacy, Michaela seeks to determine the optimal financial strategy. With an estimated annual inflation rate of 3.2%, and a projected portfolio return of 8.5%, Michaela understands the importance of a comprehensive approach to her financial planning. As she steps into this crucial phase of life, Michaela looks to navigate the complex landscape of retirement preparedness with strategic foresight and informed decision-making. Your Task: Explain your answers to the following questions in detail, providing support from the textbook or other relevant sources. Your answers should be formatted as a report you are preparing for your clients' financial planning team, so be professional and thorough. . How much income will the lient need in their first year after retirement? . What amount of capital is necessary at the start of retirement to support their income needs throughout retirement? . They would like to know how much they need to save each year to fund retirement? If they want to leave $2,000,000 (actual amount of donation at death), how much additional capital would they need to have accumulated at the time they retire at age 677 a. Assume this amount will continue to be invested at 9.5% throughout retirement until the end of their plan. . For purposes of Social Security retirement benefits, the client will reach full retirement age at 67. Their full benefit is expected to be $24,000 in today's dollars. If they decide to factor in Social Security and begin taking Social Security benefits when they at age 70, how much would they need to save every year? a. Be sure to research the benefit of delayed retirement and that in your calculation. Potential Point Value (PPV): 70 points