personal death ch. 18
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For the average individual, which one of the following statements is most likely correct regarding retirement?
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I need to save whatever I can, even if it's a small amount, to help cover my retirement costs.
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What is true of retirement planning?
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I should update my retirement plan periodically
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what are some truths about retirement planning?
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You can expect to spend about 16 to 30 years in retirement. It's never too early to begin planning for retirement. You should not let your 45th birthday roll by without a comprehensive retirement plan. Retirement planning has both emotional and financial components.
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What is the first step of retirement planning?
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analyze your current assets and liabilities.
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How do you find your net worth?
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subtracting your liabilities from your assets.
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When a lender uses your house as collateral to buy an annuity for you from a life insurance company, it is called:
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mortgage life insurance
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You can get a reverse mortgage annuity if:
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your mortgage is largely or completely paid off.
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During a divorce, pension benefits are generally divided between the spouses primarily based on the:
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length of marriage
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In a marriage that lasts more than 15 years, there's generally a ____________ split of the marital assets.
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50-50
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Which statement is correct regarding retirement living expenses?
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The exact amount of money you'll need is impossible to predict
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Which one of the following expenditures for retirees is most likely to increase?
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health care
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Which one of the following expenditures for retirees is most likely to decrease?
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clothing expenses
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Which one of the following expenditures for retirees is most likely to decrease?
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federal income taxes
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Which type of housing is preferred by most persons who are approaching retirement?
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present home
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Which of the following is a tip from retirement specialists on how to uncover hidden taxes and other costs of a retirement area?
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Retirement specialists recommend all of these actions to uncover hidden taxes and costs.
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Which one of the following is the most widely used source of retirement income?
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company pension plans
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Which employer retirement plan specifies the benefits promised to the employee at the normal retirement age?
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defined-benefit plan
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What are the two most popular personal retirement plans?
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Keogh accounts and individual retirement accounts
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Which retirement plan is specifically designed for self-employed individuals and their employees?
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Keogh plan
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An annuity in which you receive an income for the rest of your life, but no payments are made to anyone after your death is called:
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straight life annuity
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Which type of annuity gives more income per dollar of outlay than any other type?
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straight life annuity
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Once you retire, the first step in stretching your retirement income is to make sure that you are:
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receiving all of the income to which you are entitled.
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In respect to your federal income taxes, which one of the following may you have to do during retirement, even if you did not have to do so prior to retiring? (Assume you have both pre- and post-retirement income.)
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File semi-annual tax returns in April and October
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Which one of the following is a disadvantage associated with Social Security retirement income?
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Earned income partially offsets benefits
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Beverly Foster is planning for her retirement. She has determined that her car is worth $10,000, her home is worth $150,000, her personal belongings are worth $100,000, and her stocks and bonds are worth $300,000. She owes $50,000 on her home and $5,000 on her car. What step in the retirement planning process is Beverly completing?
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Analyzing her current assets and liabilities
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Nancy Moore is planning for her retirement. She guesses that by the time she retires her mortgage will be paid off on her home. She expects she will pay $600 a month on food and that her medical expenses will be $400 a month. She also estimates that she will spend $400 a month on things that she enjoys like traveling, going to concerts, reading and other similar activities. What step in the retirement planning process is Nancy completing?
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Estimating her spending needs
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Rebecca Murphy is planning for her retirement. She has done some checking and thinks she will get about $1,025 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 $500 per month. What step in the retirement planning process is Rebecca completing?
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Evaluating her planned retirement income
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Karen Endicott is planning for her retirement. She knows that after she retires she will no longer need her own single family dwelling. She plans on buying a condominium in Chicago, close to the bus and train line and close to a grocery store. What step in the retirement planning process is Karen completing?
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Evaluating her retirement housing
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Janice Jacobs is planning for her retirement. She knows what assets and liabilities she has now and expects to have in the future. She knows what her spending patterns are likely to be and adjusted them for inflation. She also has identified all of her sources of income after she retires. Now she is sitting down and planning her income and expenses each month. After she has finished this plan, she knows that she has enough income to cover her expected expenses and still have $200 extra each month for emergencies and other unplanned activities. Even with inflation, she thinks she can sustain this plan for approximately 30 years. What step in the retirement planning process is Janice completing?
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Developing a balanced budget based on her retirement income
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What is most likely to be an individual's single biggest asset?
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home
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When should you apply for Social Security?
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3 months before you retire
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What happens to your Social Security income if you retire early?
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There is a permanent reduction of 5/9 of one percent for each month that you retire early.
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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?
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70
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As its retirement plan contribution, Aaron Copeland's employer has been buying shares of the company's stock for Aaron's benefit. What type of retirement plan does Aaron most likely have?
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stock bonus plan
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The contribution Billy Freniere's employer makes to his retirement plan depends on the profits of the company. What type of retirement plan does Billy have?
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profit-sharing plan
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Sarah Logan is a professor at a public university. Her employer makes nontaxable contributions to a plan in her name and reduces her salary by the same amount. What type of retirement plan does Sarah have?
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403(b) plan
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Ben Carmichael has been making contributions into an individual retirement account for his retirement. His contributions are tax deductible as his employer does not offer a retirement plan. What type of individual retirement account does he have?
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Traditional IRA
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Jeremiah Brown has been making contributions into an individual retirement account for his retirement. His contributions are not tax deductible but his earnings accumulate tax free. What type of individual retirement account does he have?
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Roth IRA
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Bruce Willis has been making contributions into an individual retirement account on behalf of his nonworking wife. What type of individual retirement account is this?
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spousal IRA
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Sam Waterston has been making contributions into an individual retirement account to help pay for his children to go to college. Which type of account is he most likely using?
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Coverdell Education Savings Account
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Which is correct with respect to life expectancy?
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Women have a longer life expectancy than men.
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Which of the following is typically a characteristic of a defined benefit plan?
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Employer funded with federal rules setting the amounts that employers must contribute
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Which of the following is typically a characteristic of a defined contribution plan?
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No federal guarantee of benefits
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Which one of the following is not a typical characteristic of a defined benefit plan?
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Employee required contributions
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Which one of the following is not a typical characteristic of a defined contribution plan?
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Guaranteed formula-based benefit
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Which one of the following is not a private source of retirement income?
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social security
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Which of the following is a feature of an Education IRA (or Coverdell Education Savings Account)?
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Tax-deferred interest and earnings 10% early withdrawal penalty waiver when money is used for higher-education Annual limit on individual contributions Non-deductible contributions
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Social Security covers what percent of all U.S. workers?
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97
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According to the 2012 Trustees Report, in what year is it projected that the funds available for paying Social Security benefits will be exhausted at current benefit and tax rates?
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2033
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What percent of Americans ages 65 to 74 are still in the workforce?
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58
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People born after 1928 need at least how many quarters of coverage to qualify for Social Security benefits?
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40
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The full Social Security benefit for a spouse is what percent of the retired worker's full benefit?
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50
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Which of the following is considered a tax-sheltered annuity plan (TSA)?
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401k, Section 403b, and Section 457 plans
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Your right to at least a portion of the benefits you have accrued under an employer pension plan is called:
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vesting
