Sarah (age 42) and Molly (age 39) Hickok, residents of Anchorage, Alaska, recently told you that they have become increasingly worried about their retirement. Sarah, a public school teacher, dreams of retiring at 62 so they can travel and visit family. Molly, a self-employed travel consultant, is unsure that their current retirement plan will achieve that goal. She is concerned that the cost of living in Alaska along with their lifestyle have them spending at a level they could not maintain. Although they have a nice income of more than $100,000 per year, they got a late start planning for retirement, which is now just 20 years away. Sarah has tried to plan for the future by contributing to her 403(b) plan, but she is only investing 6 percent of her income when she could be investing 10 percent. a) Calculate the future value income need for their first year in retirement, assuming an inflation rate of 2 percent and an income replacement of 80 percent. b) Calculate the projected annual income at retirement that will be generated by their portfolio, assuming a nominal rate of return of 9 percent, a 20-year retirement period, and no further contributions. c) Given their projected Social Security and investment income, how much will Sarah and Molly need to invest annually to make up their income shortfall? Into what account(s) would you suggest they make the investments?