Deck 14: Planning for Retirement

Question 1

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

Answer 1

False

Question 2

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

Answer 2

False

Question 3

The best retirement investment is fixed income securities such as CDs and Treasury notes.

Answer 3

False

Question 4

Social security benefits alone can usually fund a comfortable retirement.

Question 5

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

Question 6

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

Question 7

Most people are too conservative when investing their retirement funds.

Question 8

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

Question 9

A retiree's principal source of retirement income is Social Security.

Question 10

Social Security represents about 38% of total retiree income.

Question 11

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

Question 12

Household expenses usually increase after retirement.

Question 13

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 14

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 15

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

Question 16

Employees of state and local governments cannot participate in the Social Security system.

Question 17

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

Question 18

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

Question 19

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

Question 20

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

Question 21

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

Question 22

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

Question 23

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

Question 24

To qualify for full retirement benefits,a worker must be employed in a job covered by Social Security for at least 40 consecutive quarters.

Question 25

Reduced early retirement benefits can be received at age 62.

Question 26

Social security is meant to be a retirement income supplement.

Question 27

Reduced early retirement Social Security benefits can be received at age 60.

Question 28

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 29

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

Question 30

Social Security taxes are not limited by the amount of wages earned.

Question 31

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

Question 32

For anyone born in 1960 or later,the full retirement age is 65.

Question 33

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

Question 34

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

Question 35

The current trend in retirement plans is toward contributory plans.

Question 36

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

Question 37

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

Question 38

Qualified retirement plans provide employees with tax benefits.

Question 39

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 40

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

Question 41

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

Question 42

403(B)plans are the most common salary reduction plans.

Question 43

Supplemental retirement plans are usually voluntary.

Question 44

403(b)and 457 plans are similar to 401(k)plans,but they are for employees of public,non-profit organizations.

Question 45

One can contribute up to $20,000 annually to a 401(k)plan.

Question 46

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

Question 47

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

Question 48

The SEP is designed for self-employed individuals.

Question 49

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

Question 50

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

Question 51

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

Question 52

About 40% of all full-time workers are covered by company-financed retirement plans.

Question 53

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

Question 54

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

Question 55

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

Question 56

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

Question 57

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

Question 58

Profit-sharing plans allow flexible employer contributions to the plan.

Question 59

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

Question 60

The number of new retirement plans started among small businesses is growing.

Question 61

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

Question 62

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

Question 63

Annuity proceeds are limited to the life of one person.

Question 64

A single premium annuity must be purchased with a lump-sum payment.

Question 65

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

Question 66

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

Question 67

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

Question 68

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

Question 69

Annuities may provide survivor's benefits.

Question 70

Variable annuities are usually better choices than fixed annuities for risk tolerant investors during the withdrawal phase of the annuity.

Question 71

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

Question 72

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

Question 73

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

Question 74

Single premium annuities result in single payment of proceeds.

Question 75

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

Question 76

An IRA is a type of an investment.

Question 77

Annuities may guarantee proceeds for a specific period or for a specific amount.

Question 78

The maximum contribution to a Keogh plan in 2015 was $50,000.

Question 79

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

Question 80

It is possible to convert a traditional IRA to a Roth IRA.