Deck 18: Starting Early: Retirement Planning

Question 1

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

Answer 1

True

Question 2

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

Answer 2

True

Question 3

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

Answer 3

True

Question 4

The time to begin saving is when you are young.

Question 5

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

Question 6

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

Question 7

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

Question 8

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

Question 9

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

Question 10

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

Question 11

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

Question 12

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

Question 13

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

Question 14

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

Question 15

Inflation increases the purchasing power of your retirement savings.

Question 16

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

Question 17

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

Question 18

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

Question 19

Your assets include everything you own that has value.

Question 20

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

Question 21

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

Question 22

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

Question 23

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

Question 24

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

Question 25

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

Question 26

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

Question 27

Your expenses for leisure activities will probably decrease during retirement.

Question 28

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

Question 29

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

Question 30

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

Question 31

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

Question 32

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

Question 33

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 34

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 35

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

Question 36

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

Question 37

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

Question 38

The law exempts Social Security benefits from federal income taxes.

Question 39

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

Question 40

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

Question 41

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

Question 42

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

Question 43

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

Question 44

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 45

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

Question 46

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

Question 47

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

Question 48

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 49

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

Question 50

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

Question 51

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

Question 52

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

Question 53

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

Question 54

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

Question 55

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

Question 56

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 57

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

Question 58

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 59

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

Question 60

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

Question 61

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

Question 62

The Education IRA was renamed the Coverdell Education Savings Account.

Question 63

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.

Question 64

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

Question 65

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

Question 66

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

Question 67

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

Question 68

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

Question 69

You can keep money in most retirement plans indefinitely.

Question 70

You can borrow from your Roth IRA.

Question 71

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

Question 72

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

Question 73

ERISA established the Pension Benefit Guaranty Corporation (PBGC).

Question 74

You can put your IRA funds in many kinds of investments¾stock,bonds,mutual funds,real estate,and U.S.-minted gold and silver coins.

Question 75

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

Question 76

You can convert your traditional IRA to a Roth IRA.

Question 77

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

Question 78

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

Question 79

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

Question 80

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