Question 1

The purpose of the Social Security Act of 1935 was to create a basic program to:

Accepted Answer

A) ensure retirement income equal to 75% of preretirement income. 
B) pay for retirees'  health care costs. 
C) replace defunct pension fund plans. 
D) provide a basic and adequate income to eligible retirees. 
E) levy a tax on the retirement funds of federal civilian employees. 
A) ensure retirement income equal to 75% of preretirement income. 
B) pay for retirees'  health care costs. 
C) replace defunct pension fund plans. 
D) provide a basic and adequate income to eligible retirees. 
E) levy a tax on the retirement funds of federal civilian employees. D

Question 2

Social Security benefits (cash benefits)are funded by:

Accepted Answer

A) voluntary contributions from the government, employers, and self-employed people. 
B) compulsory contributions from employees, employers, and self-employed people. 
C) state and income taxes. 
D) charitable contributions from the federal government. 
E) federal income taxes. 
A) voluntary contributions from the government, employers, and self-employed people. 
B) compulsory contributions from employees, employers, and self-employed people. 
C) state and income taxes. 
D) charitable contributions from the federal government. 
E) federal income taxes. B

Question 3

Marcia works for Telephonic Industries and participates in its supplemental retirement plan. Last year, the firm did not earn a profit. Therefore, it did not contribute to the supplemental retirement plan. This plan is a(n):

Accepted Answer

A) defined benefit plan. 
B) noncontributory plan. 
C) SEP plan. 
D) profit-sharing plan. 
E) Keogh plan. 
A) defined benefit plan. 
B) noncontributory plan. 
C) SEP plan. 
D) profit-sharing plan. 
E) Keogh plan. D

Question 4

Your Social Security contribution depends on your current income and retirement income goal.

Accepted Answer

A) True 
 B)False

Question 5

Gordon and Lisa estimate that they will need $1,875,000 in 40 years for their retirement fund. If they can earn 8% annually on their funds, how much do they need to save annually? (Round to the nearest whole dollar.)

Accepted Answer

A) $7,238 
B) $7,987 
C) $8,103 
D) $9,234 
E) $9,875 
A) $7,238 
B) $7,987 
C) $8,103 
D) $9,234 
E) $9,875

Question 6

Lois, a 67-year-old, is receiving Social Security benefits. She received $25,000 in interest and dividends this year. Her Social Security benefits are:

Accepted Answer

A) subject to an earnings test. 
B) reduced to half because of these earnings. 
C) not reduced because of these earnings. 
D) reduced by the federal tax paid on her interest income. 
E) reduced by a penalty. 
A) subject to an earnings test. 
B) reduced to half because of these earnings. 
C) not reduced because of these earnings. 
D) reduced by the federal tax paid on her interest income. 
E) reduced by a penalty.

Question 7

It really makes little difference whether you start retirement savings at age 25 or at age 45.

Accepted Answer

A) True 
 B)False

Question 8

The third step in retirement planning is to formulate an investment program.

Accepted Answer

A) True 
 B)False

Question 9

Single premium annuities result in a lump-sum payment of benefits.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following statements regarding Social Security benefits is true?

Accepted Answer

A) Social Security benefits are retirement benefits extended only to self-employed people. 
B) For the average wage earner, Social Security benefits match a percentage of the income earned in the year before retirement. 
C) Social Security benefits are available to military personnel only. 
D) Social Security benefits may be reduced if the recipient is under age 55 and still gainfully employed. 
E) To obtain Social Security benefits, you must participate in enough quarters. 
A) Social Security benefits are retirement benefits extended only to self-employed people. 
B) For the average wage earner, Social Security benefits match a percentage of the income earned in the year before retirement. 
C) Social Security benefits are available to military personnel only. 
D) Social Security benefits may be reduced if the recipient is under age 55 and still gainfully employed. 
E) To obtain Social Security benefits, you must participate in enough quarters.

Question 11

In order to avoid penalties, a person who is not gainfully employed must typically start taking minimum distributions from Keogh retirement accounts by age:

Accepted Answer

A) 50. 
B) 59½. 
C) 65. 
D) 70½. 
E) 75. 
A) 50. 
B) 59½. 
C) 65. 
D) 70½. 
E) 75.

Question 12

One way to pay the premiums for annuities is with a:

Accepted Answer

A) refundable premium. 
B) premium in future. 
C) premium in installments. 
D) guaranteed premium. 
E) lateral premium. 
A) refundable premium. 
B) premium in future. 
C) premium in installments. 
D) guaranteed premium. 
E) lateral premium.

Question 13

An annual contribution of $3,000 to a retirement account that earns 6% will be worth approximately _____ in 20 years. (Use the table of future value annuity factors or a financial calculator. Round to the nearest whole dollar.)

Accepted Answer

A) $60,000 
B) $96,780 
C) $100,000 
D) $110,360 
E) $192,600 
A) $60,000 
B) $96,780 
C) $100,000 
D) $110,360 
E) $192,600

Question 14

The employer retirement plan that is intended to promote employee productivity and allows the employer to vary the amount of annual contributions is a:

Accepted Answer

A) qualified defined contribution plan. 
B) thrift and savings plan. 
C) profit-sharing plan. 
D) 401(k)plan. 
E) 403(b)plan. 
A) qualified defined contribution plan. 
B) thrift and savings plan. 
C) profit-sharing plan. 
D) 401(k)plan. 
E) 403(b)plan.

Question 15

Contributions are made in after-tax dollars to:

Accepted Answer

A) traditional 401(k)plans. 
B) traditional IRA plans. 
C) SEP plans. 
D) Roth 401(k)plans. 
E) 403(b)plans. 
A) traditional 401(k)plans. 
B) traditional IRA plans. 
C) SEP plans. 
D) Roth 401(k)plans. 
E) 403(b)plans.

Question 16

Profit-sharing plans allow flexible employer contributions to the plans.

Accepted Answer

A) True 
 B)False

Question 17

If you withdraw funds from a Keogh pension plan before age 59½, you will have to pay a _____ federal income tax penalty.

Accepted Answer

A) 5% 
B) 10% 
C) 15% 
D) 20% 
E) 25% 
A) 5% 
B) 10% 
C) 15% 
D) 20% 
E) 25%

Question 18

Which of the following is a requirement for an individual to qualify for full retirement benefits under the Social Security system?

Accepted Answer

A) The individual must be employed in a job covered by Social Security for at least 60 quarters, or 15 years, which need not be consecutive. 
B) The individual must be employed in a job covered by Social Security for at least 50 quarters, or 12.5 years, which need not be consecutive. 
C) The individual must be employed in a job covered by Social Security for at least 50 consecutive quarters, or 12.5 years. 
D) The individual must be employed in a job covered by Social Security for at least 40 quarters, or 10 years, which need not be consecutive. 
E) The individual must be employed in a job covered by Social Security for at least 40 consecutive quarters, or 10 years. 
A) The individual must be employed in a job covered by Social Security for at least 60 quarters, or 15 years, which need not be consecutive. 
B) The individual must be employed in a job covered by Social Security for at least 50 quarters, or 12.5 years, which need not be consecutive. 
C) The individual must be employed in a job covered by Social Security for at least 50 consecutive quarters, or 12.5 years. 
D) The individual must be employed in a job covered by Social Security for at least 40 quarters, or 10 years, which need not be consecutive. 
E) The individual must be employed in a job covered by Social Security for at least 40 consecutive quarters, or 10 years.

Question 19

Contributions to employer-sponsored profit-sharing retirement plans are invested only in securities issued by the employing firm itself.

Accepted Answer

A) True 
 B)False

Question 20

The period during which premiums are paid for the purchase of an annuity is called the:

Accepted Answer

A) installment period. 
B) accumulation period. 
C) survivor period. 
D) distribution period. 
E) contract period. 
A) installment period. 
B) accumulation period. 
C) survivor period. 
D) distribution period. 
E) contract period.

The purpose of the Social Security Act of 1935 was to create a basic program to:

Social Security benefits (cash benefits)are funded by:

Marcia works for Telephonic Industries and participates in its supplemental retirement plan. Last year, the firm did not earn a profit. Therefore, it did not contribute to the supplemental retirement plan. This plan is a(n):

Your Social Security contribution depends on your current income and retirement income goal.

Gordon and Lisa estimate that they will need $1,875,000 in 40 years for their retirement fund. If they can earn 8% annually on their funds, how much do they need to save annually? (Round to the nearest whole dollar.)

Lois, a 67-year-old, is receiving Social Security benefits. She received $25,000 in interest and dividends this year. Her Social Security benefits are:

It really makes little difference whether you start retirement savings at age 25 or at age 45.

The third step in retirement planning is to formulate an investment program.

Single premium annuities result in a lump-sum payment of benefits.

Which of the following statements regarding Social Security benefits is true?

In order to avoid penalties, a person who is not gainfully employed must typically start taking minimum distributions from Keogh retirement accounts by age:

One way to pay the premiums for annuities is with a:

An annual contribution of $3,000 to a retirement account that earns 6% will be worth approximately _____ in 20 years. (Use the table of future value annuity factors or a financial calculator. Round to the nearest whole dollar.)

The employer retirement plan that is intended to promote employee productivity and allows the employer to vary the amount of annual contributions is a:

Contributions are made in after-tax dollars to:

Profit-sharing plans allow flexible employer contributions to the plans.

If you withdraw funds from a Keogh pension plan before age 59½, you will have to pay a _____ federal income tax penalty.

Which of the following is a requirement for an individual to qualify for full retirement benefits under the Social Security system?

Contributions to employer-sponsored profit-sharing retirement plans are invested only in securities issued by the employing firm itself.

The period during which premiums are paid for the purchase of an annuity is called the:

Understanding the Financial Process

Using Financial Statements and Budgets

Preparing Your Taxes

Managing Your Cash and Savings

Making Automobile and Housing Decisions

Using Credit

Using Consumer Loans

Insuring Your Life

Insuring Your Health

Protecting Your Property

Investment Planning

Investing in Stocks and Bonds

Investing in Mutual Funds, Etfs, and Real Estate

Preserving Your Estate

Filters

Exam 14: Planning for Retirement

The purpose of the Social Security Act of 1935 was to create a basic program to:

Social Security benefits (cash benefits)are funded by:

Marcia works for Telephonic Industries and participates in its supplemental retirement plan. Last year, the firm did not earn a profit. Therefore, it did not contribute to the supplemental retirement plan. This plan is a(n):

Your Social Security contribution depends on your current income and retirement income goal.

Gordon and Lisa estimate that they will need $1,875,000 in 40 years for their retirement fund. If they can earn 8% annually on their funds, how much do they need to save annually? (Round to the nearest whole dollar.)

Lois, a 67-year-old, is receiving Social Security benefits. She received $25,000 in interest and dividends this year. Her Social Security benefits are:

It really makes little difference whether you start retirement savings at age 25 or at age 45.

The third step in retirement planning is to formulate an investment program.

Single premium annuities result in a lump-sum payment of benefits.

Which of the following statements regarding Social Security benefits is true?

In order to avoid penalties, a person who is not gainfully employed must typically start taking minimum distributions from Keogh retirement accounts by age:

One way to pay the premiums for annuities is with a:

An annual contribution of $3,000 to a retirement account that earns 6% will be worth approximately _____ in 20 years. (Use the table of future value annuity factors or a financial calculator. Round to the nearest whole dollar.)

The employer retirement plan that is intended to promote employee productivity and allows the employer to vary the amount of annual contributions is a:

Contributions are made in after-tax dollars to:

Profit-sharing plans allow flexible employer contributions to the plans.

If you withdraw funds from a Keogh pension plan before age 59½, you will have to pay a _____ federal income tax penalty.

Which of the following is a requirement for an individual to qualify for full retirement benefits under the Social Security system?

Contributions to employer-sponsored profit-sharing retirement plans are invested only in securities issued by the employing firm itself.

The period during which premiums are paid for the purchase of an annuity is called the:

Understanding the Financial Process

Using Financial Statements and Budgets

Preparing Your Taxes

Managing Your Cash and Savings

Making Automobile and Housing Decisions

Using Credit

Using Consumer Loans

Insuring Your Life

Insuring Your Health

Protecting Your Property

Investment Planning

Investing in Stocks and Bonds

Investing in Mutual Funds, Etfs, and Real Estate

Preserving Your Estate

Filters