Deck 14: Planning for Retirement

Question 1

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.

Answer 1

False

Question 2

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

Answer 2

True

Question 3

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

Answer 3

True

Question 4

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

Question 5

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

Question 6

Social security benefits alone can usually fund a comfortable retirement.

Question 7

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

Question 8

Most people are too conservative when investing their retirement funds.

Question 9

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

Question 10

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

Question 11

Household expenses usually increase after retirement.

Question 12

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 13

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

Question 14

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

Question 15

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

Question 16

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

Question 17

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

Question 18

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

Question 19

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 20

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

Question 21

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

Question 22

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 23

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 24

Qualified retirement plans provide employees with tax benefits.

Question 25

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

Question 26

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

Question 27

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

Question 28

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

Question 29

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

Question 30

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

Question 31

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

Question 32

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

Question 33

Reduced early retirement benefits can be received at age 62.

Question 34

The current trend in retirement plans is towards contributory plans.

Question 35

Social security is meant to be a retirement income supplement.

Question 36

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

Question 37

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

Question 38

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

Question 39

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

Question 40

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

Question 41

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

Question 42

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 43

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

Question 44

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

Question 45

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

Question 46

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

Question 47

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

Question 48

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

Question 49

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 50

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

Question 51

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

Question 52

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

Question 53

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

Question 54

The SEP is designed for self-employed individuals.

Question 55

Supplemental retirement plans are usually voluntary.

Question 56

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

Question 57

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

Question 58

Profit sharing plans allow flexible employer contributions to the plan.

Question 59

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

Question 60

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

Question 61

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

Question 62

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

Question 63

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

Question 64

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

Question 65

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

Question 66

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

Question 67

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

Question 68

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

Question 69

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

Question 70

Single premium annuities result in single payment of proceeds.

Question 71

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

Question 72

Early death results in the loss of annuity capital in a straight life annuity.

Question 73

Annuity proceeds are limited to the life of one person.

Question 74

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

Question 75

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

Question 76

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

Question 77

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

Question 78

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

Question 79

Annuities may provide survivor's benefits.

Question 80

An IRA is a type of an investment.