Deck 18: Starting Early: Retirement Planning

Question 1

Your expenses for leisure activities will probably decrease during retirement.

Answer 1

False

Question 2

One of the misconceptions about retirement is that your expenses will drop when you retire.

Answer 2

True

Question 3

The time to begin saving is when you are young.

Answer 3

True

Question 4

Inflation increases the purchasing power of your retirement savings.

Question 5

Saving money doesn't come naturally to many young people.

Question 6

Only by saving now and curtailing current spending can you ensure a comfortable retirement later.

Question 7

Divorce creates difficulties when it comes to division of marital assets for adults thinking about their retirement years.

Question 8

Generally,the current value of your jewelry is not included in your assets.

Question 9

It is vital to engage in basic retirement planning activities throughout your working years.

Question 10

In a reverse annuity mortgage,a lender uses your house as collateral to buy an annuity for you from a life insurance company.

Question 11

Your mortgage,car payments,credit card balances,and taxes due are all examples of your liabilities.

Question 12

You can depend on Social Security and your company pension to pay for your basic living expenses.

Question 13

The exact amount of money you will need in retirement can be predicted accurately.

Question 14

It is almost certain that your pension benefits will increase to keep pace with inflation.

Question 15

During retirement,you should increase your premium payments by increasing the face value of your life insurance.

Question 16

Saving now for the future requires tackling the trade-offs between spending and saving.

Question 17

The current value of your life insurance and pensions are included in your assets.

Question 18

You can depend on your employer's health insurance plan and Medicare to pay all your medical expenses when you retire.

Question 19

Your assets include everything you own that has value.

Question 20

A successful,happy retirement just doesn't happen; it takes planning and continual evaluation.

Question 21

People born after 1928 need at least 60 quarters of coverage to qualify for Social Security benefits.

Question 22

The Social Security office will require you to provide proof of your age to apply for Social Security benefits.

Question 23

If you think you want to live in another city during retirement,it's a good idea to plan vacations now in areas you might enjoy later.

Question 24

Under a 401(k)plan,your employer makes nontaxable contributions to the plan for your benefit and reduces your salary by the same amounts.

Question 25

Your federal income taxes will probably be lower during the retirement years.

Question 26

According to the Social Security Administration,disabled workers represent 14% of those who receive Social Security benefits.

Question 27

If you leave your company before you retire,then you have a right to a portion of the benefits you have accrued under an employer pension plan only if you are vested.

Question 28

Too many people make the move to change housing during retirement without doing enough research.

Question 29

Social Security is a package of protection,providing retirement,survivors',and disability benefits.

Question 30

If you work after 65,your Social Security benefits will neither increase nor decrease.

Question 31

Most people can qualify for reduced Social Security retirement benefits at age 62.

Question 32

Your work-related expenses,such as driving back and forth to work,will be lower or eliminated during retirement.

Question 33

Because of longer life expectancies,the full retirement age is greater than age 65 for younger individuals.

Question 34

Your Social Security payments will start at age 65 whether you apply for benefits or not.

Question 35

In a Roth IRA,contributions are not tax deductible,but earnings accumulate tax free.

Question 36

Social Security was originally intended to provide 100 percent of retirement income.

Question 37

Although medical expenses vary from person to person,they tend to decrease with age.

Question 38

The potential loss of buying power due to inflation is what makes it so important to plan ahead for your retirement.

Question 39

Social Security should be the only source of your retirement income.

Question 40

The law exempts all Social Security benefits from federal income taxes.

Question 41

Money-purchase pension plans,stock bonus plans,profit-sharing plans,401(k)plans,403(b)plans,and Section 457 plans are examples of defined-contribution plans.

Question 42

Besides Social Security,the federal government administers several other retirement plans for federal government and railroad employees.

Question 43

Your Social Security benefits may be reduced if you earn above a certain amount a year,depending on your age and the amount you earn.

Question 44

Profit-sharing plans and 401(k)plans are examples of defined-contribution plans.

Question 45

Over the last two decades,the defined-benefit plan has continued to grow rapidly while the number of defined-contribution plans has generally dropped.

Question 46

Employees who are covered under the Railroad Retirement System are also covered by Social Security.

Question 47

Although the full retirement age is rising,you should still apply for Social Security benefits three months before your 65th birthday.

Question 48

Social Security benefits do not increase even if the cost of living increased during the preceding year.

Question 49

The shift to defined-contribution plans has forced employees to take more responsibility for their retirement.

Question 50

When you change jobs,your 401(k)plan savings can be left with the previous employer's plan,can be rolled over to the new employer's plan or to an IRA,or can be cashed out.

Question 51

With a defined-contribution plan,the plan document specifies the benefits promised to the employee at the normal retirement age.

Question 52

If your employer is a tax-exempt institution such as a hospital,university,or museum,then the salary reduction plan is called a Section 403(b)plan.

Question 53

All earnings in a tax-sheltered annuity grow without current federal taxation.

Question 54

Pension plan portability enables you to carry earned benefits from one employer's pension plan to another's when you change jobs.

Question 55

Because of their actuarial aspects,defined-benefit plans tend to be more complicated and more expensive to administer than defined-contribution plans.

Question 56

The biggest benefit of an IRA lies in its tax-deferred earnings growth; the longer the money accumulates tax deferred,the bigger the benefit.

Question 57

If you are a government employee,then the salary reduction plan may be a Section 457 plan.

Question 58

Most employer pension plans are either defined-contribution or defined-benefit plans.

Question 59

According to the 2015 OASDI Trustees Report,"Social Security is not sustainable over the long term at current benefit and tax rates."

Question 60

A defined-contribution plan has an individual account for each employee; therefore,these plans are also called individual account plans.

Question 61

An annuity provides guaranteed income for life.

Question 62

Annuity payouts may either be a fixed or a variable amount.

Question 63

The Education IRA was renamed the Coverdell Education Savings Account.

Question 64

The amount of the minimum required distribution from an IRA at age 70-1/2 is based on your life expectancy at the time of the distribution.

Question 65

You may convert your traditional IRA to a Roth IRA.

Question 66

You can put your IRA funds in many kinds of investments,including stocks,bonds,mutual funds,real estate,and U.S.-minted gold and silver coins.

Question 67

Earned interest on annuities accumulates tax free until the annuity payments begin.

Question 68

Your contributions to a SEP-IRA,which can vary from year to year,are tax deductible and earnings accumulate on a tax-deferred basis.

Question 69

You can borrow from your Roth IRA.

Question 70

You can keep money in most retirement plans indefinitely.

Question 71

ERISA established the Pension Benefit Guaranty Corporation to provide pension insurance.

Question 72

Under certain circumstances,the Roth IRA allows for tax-free,penalty-free distributions.

Question 73

You can only buy an annuity by making periodic payments.

Question 74

The Social Security Administration provides a history of your earnings and an estimate of your future monthly benefits online.

Question 75

The average 2018 monthly Social Security benefit for a retired worker is approximately $1,408.

Question 76

Keogh plans can be defined-contribution plans or defined-benefit plans.

Question 77

Whether or not you are covered by a pension plan,you can still make nondeductible IRA contributions.

Question 78

A SEP-IRA plan is simply an individual retirement account funded by the employer.

Question 79

The rate of return on annuities is rarely tied to market rates.

Question 80

Your contribution to a Traditional IRA is fully tax deductible regardless of your filing status and your income.