Accounting

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Confused on the method used to solve this problem and could really use some help. The 5% is throwing me off as we don't know 5% on what amount and we assume that amount compounds over time?

You are currently 25 years old and have just spent the past weekend in Vegas. As you are leaving the hotel, you decide to drop one more quarter in to the progressive slot machine. Amazingly enough, you hit the jackpot paying out $3,500,000.
You decide that you want to spend as much as possible but you also want to set yourself up for a comfortable retirement beginning at age 55. You know that you can safely earn a 5% return. Upon retirement, you want to be able to pull from your investment $60,000 for 20 years.
How much of your winnings do you have to invest today to provide for your retirement demands?

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