Deck 18: Starting Early: Retirement Planning

Question 1

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

Answer 1

False

Question 2

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

Answer 2

True

Question 3

Inflation increases the purchasing power of your retirement savings.

Answer 3

False

Question 4

Some experts suggest starting retirement planning while you are in school.

Question 5

The time to begin saving is when you are young.

Question 6

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

Question 7

A three percent rate of inflation will cause prices to double every 24 years.

Question 8

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

Question 9

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

Question 10

Your assets include everything you own that has value.

Question 11

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

Question 12

A successful, happy retirement just doesn't happen; you have to plan for it.

Question 13

When settling a divorce case, the division of pension benefits generally depends on the length of the marriage.

Question 14

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

Question 15

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

Question 16

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

Question 17

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

Question 18

Your first step in retirement planning is to analyze your current assets and liabilities.

Question 19

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

Question 20

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

Question 21

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 22

Your expenses for leisure activities will probably decrease during retirement.

Question 23

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

Question 24

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

Question 25

If a marriage lasted more than 15 years, the marital assets are generally split 50-50 if the couple divorces.

Question 26

To boost demand for universal design homes, builders are marketing to families of all ages.

Question 27

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

Question 28

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

Question 29

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

Question 30

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

Question 31

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

Question 32

Staying in their present home is the alternative preferred by most people who are approaching retirement.

Question 33

The law exempts Social Security benefits from federal income taxes.

Question 34

Social Security is the most widely used source of retirement income.

Question 35

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

Question 36

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

Question 37

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

Question 38

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

Question 39

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

Question 40

Under a 401(k) plan, you can elect to have your employer make nontaxable contributions to the plan for your benefit and reduce your salary by an offsetting amount.

Question 41

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

Question 42

According to the Social Security Administration, the Social Security program is financially sound.

Question 43

Money-purchase pension plans, stock bonus plans, profit-sharing plans, 401(k), 403(b) plans, and Section 457 plans are often referred to as tax-sheltered annuity (TSA) plans.

Question 44

Up to 85 percent of your Social Security benefits may be subject to federal income tax.

Question 45

Most employers' pension plans are either defined-contribution or defined-benefit plans.

Question 46

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

Question 47

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 48

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

Question 49

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

Question 50

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 51

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

Question 52

Vesting is your right to at least a portion of the benefits you have accrued under an employer pension plan.

Question 53

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

Question 54

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

Question 55

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

Question 56

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

Question 57

The full Social Security benefit for a spouse is one-half of the retired worker's full benefit.

Question 58

If you are a government employee, you may have a Section 457 plan.

Question 59

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

Question 60

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

Question 61

The Employee Retirement Income Security Act of 1974 (ERISA) sets minimum standards for pension plans in private industry.

Question 62

The two most popular personal retirement plans are individual retirement accounts (IRAs) and Keogh accounts.

Question 63

You can convert your traditional IRA to a Roth IRA.

Question 64

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

Question 65

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

Question 66

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

Question 67

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

Question 68

ERISA established the Pension Benefit Guaranty Corporation (PBGC).

Question 69

A Keogh plan is also called a self-employed retirement plan.

Question 70

Keogh plans can be both defined-contribution and defined-benefit plans.

Question 71

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

Question 72

You can keep money in most retirement plans indefinitely.

Question 73

Your contribution to a Traditional IRA is fully tax deductible regardless of your earned income.

Question 74

The Education IRA was renamed the Coverdell Education Savings Account.

Question 75

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

Question 76

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

Question 77

You can borrow from your Roth IRA.

Question 78

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

Question 79

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

Question 80

The amount of the minimum required distribution from a 401(k) at age 70½ is based on your life expectancy at the time of the distribution.