Deck 18: Starting Early: Retirement Planning

Question 1

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

Answer 1

True

Question 2

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

Answer 2

False

Question 3

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

Answer 3

True

Question 4

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

Question 5

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

Question 6

Your assets include everything you own that has value.

Question 7

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

Question 8

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

Question 9

Inflation increases the purchasing power of your retirement savings.

Question 10

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

Question 11

The time to begin saving is when you are young.

Question 12

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

Question 13

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

Question 14

Your expenses for leisure activities will probably decrease during retirement.

Question 15

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

Question 16

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

Question 17

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

Question 18

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

Question 19

Divorcing couples should pay attention to the tax implications of retirement benefits.

Question 20

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

Question 21

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

Question 22

To correctly divide retirement benefits during divorce,a couple needs to create a legal document called a qualified domestic relations order (QDRO).

Question 23

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

Question 24

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

Question 25

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

Question 26

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

Question 27

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

Question 28

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

Question 29

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

Question 30

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

Question 31

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

Question 32

According to the Social Security Administration,disabled workers represent 15% of those who receive Social Security benefits.

Question 33

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

Question 34

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

Question 35

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 36

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

Question 37

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

Question 38

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

Question 39

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 40

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

Question 41

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

Question 42

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

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

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

Question 45

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

Question 46

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

Question 47

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

Question 48

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

Question 49

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

Question 50

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

Question 51

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

Question 52

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

Question 53

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

Question 54

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 55

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

Question 56

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 57

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

Question 58

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 59

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 60

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

Question 61

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

Question 62

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

Question 63

You can borrow from your Roth IRA.

Question 64

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

Question 65

You can convert your traditional IRA to a Roth IRA.

Question 66

The average 2016 monthly Social Security benefit for a retired worker is approximately $1,300.

Question 67

The amount of the minimum required distribution from an IRA at age 70½ is based on your life expectancy at the time of the distribution.

Question 68

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

Question 69

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

Question 70

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

Question 71

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

Question 72

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

Question 73

You can only buy an annuity by making periodic payments.

Question 74

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

Question 75

ERISA established the Pension Benefit Guaranty Corporation.

Question 76

An annuity provides guaranteed income for life.

Question 77

The Education IRA was renamed the Coverdell Education Savings Account.

Question 78

You can keep money in most retirement plans indefinitely.

Question 79

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

Question 80

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.