Deck 14: Planning for Retirement

Question 1

An investor's principal source of retirement income is social security retirement funds.

Answer 1

False

Question 2

Nearly 75% of current retirees receive some type of employer-provided retirement pension plan.

Answer 2

False

Question 3

Having an accurate current income and expenditures statement would be very useful when calculating retirement needs.

Answer 3

True

Question 4

Government assistance,primarily Social Security,is the largest single source of income for the average retiree.

Question 5

Starting later in life and being too conservative when investing are both common retirement planning mistakes.

Question 6

Social security benefits may be available to dependents of the retired,disabled,or deceased worker.

Question 7

The third step in retirement planning is to formulate an investment program.

Question 8

In short-term retirement planning you estimate the required level of retirement income as a percentage of current income,fund that amount,and then adjust that number every 3 to 5 years.

Question 9

Social security benefits alone can usually fund a comfortable retirement.

Question 10

Your social security withholdings are placed in an account with your name on it.

Question 11

If one is unsure about the facts needed to estimate retirement needs,it is better to do nothing for a few years.

Question 12

When one estimates retirement needs,you start with a projection of expenses stated in current dollars.

Question 13

In long-term retirement planning you decide on the required level of retirement income and funds needed over a 3 to 5 year series of intervals.

Question 14

Even the best retirement plan needs to be reviewed every few years.

Question 15

It really makes little difference whether you start retirement savings at age 25 or at age 45.

Question 16

The first step in retirement planning is to identify retirement goals.

Question 17

When estimating retirement needs,you use the before-retirement investment return rate to adjust the current dollar shortfall to the actual shortfall at retirement.

Question 18

To be eligible for social security retirement benefits,30 quarters of covered employment are generally needed.

Question 19

Household expenses usually increase after retirement.

Question 20

Most people are too conservative when investing their retirement funds.

Question 21

Upon retirement,married couples automatically receive 1.5 times the higher earning spouse's Social Security benefit.

Question 22

By itself,Social Security is sufficient allow a worker and spouse to maintain their preretirement standard of living.

Question 23

Depending on your age,Social security retirement benefits could be reduced because of employment income.

Question 24

More than 50 percent of all wage earners and salaried workers today are covered by some type of employer-sponsored retirement or profit-sharing plan.

Question 25

Over the years,social security retirement age will increase beyond age 65.

Question 26

Reduced early retirement benefits can be received at age 60.

Question 27

The two most common sources of retirement income for most people are social security and pensions.

Question 28

The current trend in retirement plans is towards contributory plans.

Question 29

Self-employer workers pay twice as much for Social Security coverage compared to employed workers.

Question 30

It is legal for employers to reduce an employee's pension as a result of receiving Social Security benefits.

Question 31

Whether or not your social security benefits will be subject to income taxes depends on how much other income you received during the year.

Question 32

Whether or not social security benefits will be subject to income taxes depends on the age of the recipient.

Question 33

Once you have gained the "fully insured" status,it is not lost even if you don't work any more.

Question 34

Once you begin drawing social security benefits,you will receive a fixed level of income for the remainder of your life.

Question 35

Reduced early retirement benefits can be received at age 62.

Question 36

Qualified retirement plans provide employees with tax benefits.

Question 37

Integrating a retirement plan with Social Security benefits typically increases a retiree's retirement income.

Question 38

With a non-contributory pension plan,the employer makes no financial contribution to the account.

Question 39

Social security is meant to be a retirement income supplement.

Question 40

For most workers,participation in the social security system is mandatory.

Question 41

Profit sharing plans allow flexible employer contributions to the plan.

Question 42

A company using cliff vesting would legally have to give you vesting rights if you worked at a company 3 or more years.

Question 43

At the same time as employers are cutting back on traditional pension plans,more are offering 401(k)plans.

Question 44

The cash balance retirement plan is being used to replace traditional define benefit plans.

Question 45

Age 65 is typically the "normal retirement" age on retirement plans.

Question 46

Traditional defined benefit plans are better suited than cash balance plans for a mobile workforce.

Question 47

A graded vesting schedule would legally have to give you some vesting rights even though you worked at a company only 1 year.

Question 48

Payments from a defined benefits plan will be determined by the investment performance of the retirement funds.

Question 49

Eligibility requirements for pension and retirement plans are typically determined by the employee's age and years of service.

Question 50

A vested employee has a right to receive benefits from an employer's retirement funds even if he no longer works there.

Question 51

A graded vesting schedule would legally have to give you some vesting rights if you worked at a company for 2 or more years.

Question 52

As social security covers more employees,employer-provided pensions and individual retirement plans are covering fewer.

Question 53

A 401(k)plan allows you to defer taxes on part of your income.

Question 54

Supplemental retirement plans are usually voluntary.

Question 55

The advantage of profit sharing plans that investment in their own company stock is that the minimum value of the stock is guaranteed.

Question 56

Individuals are being forced to assume more and more responsibility for their own retirement.

Question 57

One can contribute up to $10,000 annually to a 401(k)plan.

Question 58

At the same time as employers are cutting back on traditional pension plans,more are offering defined benefit plans.

Question 59

There is a trend for companies to switch from defined benefit to defined contribution plans.

Question 60

The amount accumulated in a defined contribution plan will be determined,at least in part,by the investment performance of the retirement funds.

Question 61

Persons 50 and over are able to make larger contributions to IRAs than younger persons.

Question 62

Roth IRAs are the only IRAs that have the potential to produce tax-free earnings.

Question 63

A large selection of investment types can qualify as IRA investments.

Question 64

Miles has no retirement plan at work.Therefore,$2,000 contributed to his regular IRA will be tax deductible.

Question 65

The money you put into a Roth IRA is deductible from your taxable income in the year contributed.

Question 66

Like Keogh Plans,SEP plans are only for self-employed persons with no employees.

Question 67

Anyone with earned income can contribute to some type of IRA.

Question 68

ERISA was passed to reduce the number of private employer retirement plans.

Question 69

Keogh and SEP plans provide tax deferred methods for the self employed to save for their retirement.

Question 70

IRA withdrawals can be made without tax penalty any time after you reach the age of 59 1/2.

Question 71

Retirement plan portability is characterized by one's ability to move retirement plan investments from one investment to another investment while working for the company.

Question 72

Annuity premiums are paid to the company during the distribution period.

Question 73

The SEPP is designed for self-employed individuals.

Question 74

The employee contributions limits for 401(k)plans are the same as those for 403(b)and 457 plans.

Question 75

An IRA is a type of an investment.

Question 76

It is extremely wise to contribute at least as much to a 401(k)plan as one's employer will match.

Question 77

Employees who have 401(k)plans also have to decide how to invest the funds in their plan.

Question 78

Annuity premiums are paid to the insurance company during the accumulation period.

Question 79

A person who is self-employed on a part-time basis can qualify for a Keogh account.

Question 80

ERISA was passed to protect employees participating in private employer retirement plans.