Problem: Jonathan and Beth plan on retiring in 15 years. They have made progress on their retirement portfolio (they currently have $100,000 in their 401ks + IRAs), but need to do more. Recognizing their lack of planning they have come to you for help in determining how much they need to save annually to produce an inflation-adjusted equivalent of $50,000 per year paid at the beginning of each your over 20 years of retirement. Moreover, they would like to leave a flat $1 million (not increased for any inflation) to their children. Upon further discussion, you and your clients assume that inflation will average 3% prior to retirement and 4% thereafter. Further, your clients estimate that they will earn 12% per year prior to retirement and 7% per year during retirement. Based on the above data assumptions provide your clients with answers to the following questions. Question 1.1 What income do the Havertons want to have for their first year of retirement (i.e., the inflated value of $50,000)? Question 1.2 What is the lump sum needed on the first day of retirement to fund 20 years of annual retirement incomes and a $1 million legacy for their children (Remember that there will be 20 years of retirement income that inflates each year, the income is taken at the start of each year, and there needs to be a residual $1 million legacy (not adjusted for inflation) that will be left to their children at the end of the period). Question 1.3 How much would they have to contribute at the end of every year (up to the start of retirement) to fund their lump sum need?