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Exam 18: Starting Early: Retirement Planning

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Question 1

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Which one of the following is a true statement about retirement planning?

A) I should wait until at least age 45 to start planning for retirement.
B) My pension benefits will increase to keep pace with inflation.
C) I should update my retirement plan periodically.
D) My employer's health insurance plan will cover my medical expenses.
E) Social Security will cover my basic living expenses.

F) A) and B)
G) D) and E)

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Question 2

Multiple Choice

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Beverly Foster is planning for her retirement.She has determined that her car is worth $12,000,her home is worth $160,000,her personal belongings are worth $80,000,and her stocks and bonds are worth $250,000.She owes $50,000 on her home and $5,000 on her car.What step in the retirement planning process is Beverly completing?

A) Analyzing her current assets and liabilities
B) Estimating her spending needs
C) Evaluating her planned retirement income
D) Evaluating her retirement housing
E) Developing a balanced budget based on her retirement income

F) None of the above
G) A) and B)

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Question 3

True/False

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An annuity provides guaranteed income for life.

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

What types of housing options are available to retirees?

Which employer retirement plan specifies the benefits promised to the employee at the normal retirement age?

Once you retire,which of the following is true about drawing on your savings?

Social Security covers approximately what percent of all U.S.workers?

With a fixed-dollar annuity,the money you pay is invested in common stocks or other equities that have a guaranteed return.

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

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

Cynthia Coleman is reviewing her assets and liabilities.What is her net worth? Assets: Cash in checking account,$1,000 Cash in savings account,$2,800 Current value of Investments in U.S.savings bonds,$4,000 Current value of Investments in stocks & mutual funds,$9,700 Current cash value of life insurance,$7,300 Current value Accrued pension benefit,$25,000 Current value of house,$155,000 Current value of furniture and appliances,$8,000 Current value of Jewelry,$600 Current value of automobile,$7,200 Liabilities: Current unpaid bills,$800 Home mortgage unpaid balance,$100,000 Auto loan unpaid balance,$3,200 Property Taxes owed,$1,000 Home improvement loan balance,$1,200

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

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

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

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

If you work after age 65,your Social Security benefit will increase by one-fourth of one percent for each month you delay retirement up until what age?

Describe 4 of the 7 misconceptions about retirement planning found in the chapter and explain what you should do if you hold any of these.

If you did not start early to prepare for retirement,what are 5 tips to help you prepare for retirement when there is little time left?

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