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Exam 18: Starting Early: Retirement Planning

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Question 81

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What percent of the average worker's preretirement earnings is replaced by Social Security?

A) 25%
B) 40%
C) 50%
D) 70%
E) 90%

F) A) and B)
G) B) and C)

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Question 82

True/False

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

A) True
B) False

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Question 83

Multiple Choice

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The people who are in the best position to save are:

The full Social Security benefit for a spouse is what percent of the retired worker's full benefit?

The amount of the minimum required distribution from an IRA at age 70-1/2 is based on your life expectancy at the time of the distribution.

Which one of the following is not a typical characteristic of a defined benefit plan?

As people reach retirement age,what is the most likely housing choice they would make? Assume they are moving to a new geographic area.

During retirement planning,you would need to estimate your monthly retirement expenses.Provide examples of monthly expenses that are fixed and monthly expenses that are variable.

Rebecca Murphy is planning for her retirement.She has done some checking and thinks she will get about $1,408 a month from Social Security.She also thinks her pension plan will pay her about $1,125 per month.In addition,she has some personal retirement accounts that she thinks will pay her $400 per month.What step in the retirement planning process is Rebecca completing?

The EGTRRA was passed by Congress in 2001 and increased the employee annual contribution limit for 401(k)and other employer-sponsored retirement plans.

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

Which of the following is a tip from retirement specialists on how to uncover hidden taxes and other costs of a retirement area before moving?

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

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.

Which of the following have formidable retirement-planning challenges?

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.

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

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

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

Bruce Wills has been making contributions into an individual retirement account on behalf of his nonworking wife.What type of individual retirement account is this?