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Exam 18: Starting Early: Retirement Planning

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Question 41

True/False

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

A) True
B) False

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Question 42

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

A) True
B) False

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Question 43

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The Social Security Administration estimates that what percent of individuals age 65 and older would live in poverty without Social Security benefits?

John Carpenter works as a manager of a retail store.His employer has been setting money aside for him each month in the amount of 7 percent of his monthly earnings.What type of retirement plan does John have?

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?

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

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

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

Which federal law sets minimum standards for pension plans in private industry and protects more than 50 million workers?

During retirement,as long as you do not earn more than the annually exempt amount through part-time work,your Social Security payments will not be affected.

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

Describe 5 of the 7 misconceptions about retirement found in the chapter and explain what you should do if you hold any of these.

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 was just insured with a $500,000 term life insurance policy.What are her total liabilities?

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

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

You can borrow from your Roth IRA.

You can convert your traditional IRA to a Roth IRA.

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

What are the two most popular personal retirement plans?

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