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Exam 18: Starting Early: Retirement Planning

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Question 21

True/False

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Immediate annuities are generally purchased by people of retirement age.

A) True
B) False

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Question 22

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

A) True
B) False

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Question 23

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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?

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

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

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

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

Jasmine Smith owns a condo worth $240,000, a car valued at $25,000, and miscellaneous assets worth $7,500. She owes $185,000 on the condo and $15,000 on the car and has no other debts. Her retirement account, in which she is fully vested, contains $27,500 in mutual funds. She is insured with a $500,000 term life insurance policy. What is her net worth?

The first step in stretching your retirement income is to make sure you are receiving all the income to which you are entitled.

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

Which statement is correct regarding retirement living expenses?

You can keep money in most retirement plans indefinitely.

For the average individual, which one of the following statements is most likely correct regarding retirement?

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

Inflation increases the purchasing power of your retirement savings.

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

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

Explain the difference between a defined-contribution and defined benefit plan.

A joint-and-survivor annuity pays its installments until the death of the last designated survivor.

Describe some of the most common retirement misconceptions, and explain what you should do if you hold to any of those misconceptions.