Exam 16: Retirement Planning

Burt Reynolds has changed jobs. His last retirement plan's contributions depended on how well the company performed and he shared in the earnings. His present employer allows him ownership in the firm, although this is the riskiest plan. Burt's former plan was a(n) ________ and his current plan is a(n) ________.

Your company pays retirement benefits to current retirees out of current earnings, on a pay-as-you-go basis. This is an example of a(n) ________.

Which of the following retirement plans is designed for small businesses?

Lucius starts saving $100 per month at age 25 and averages 6% per year compounded monthly. Hector starts saving $1,215.22 per month at age 55 and averages 6% per year compounded monthly. Who will be better off at age 65 assuming neither had in money in their account when they started?

How will you access in an accurate manner the amount of your retirement income?

Why might one want to select the lump-sum payment option for one's retirement funds?

Social Security benefits are very nice to get and help many current retirees live above the poverty line. Why should someone who is 25 years old today not count on receiving the same type of Social Security benefits when they retire in 45 years from now?

How does one set up a qualified individual retirement account?

A ________ is defined by the fact that your employer provides all the funds for the retirement plan, without any contribution from you.

When planning the retirement payout, there are several options from which to choose. With the ________ option the annuity provides payments over the life of both you and your spouse.

Relate the pros and cons of defined-benefit plans.

You have determined that you will need to accumulate $1,000,000 in your retirement account in order to cover your inflation-adjusted shortfall. Which of the following is closest to the amount of money you would need to put into a tax-deferred retirement account every year if you plan on retiring in 40 years? Assume an 8% average return on this account, and that it is empty today.

One of the advantages to a traditional IRA is that it allows you to make a penalty-free withdrawal to purchase your first home.

Retirement income comes from which of the following sources?

Why have many companies switched from traditional defined-benefits plans to cash-balance plans?

Lori Watts favors the traditional IRA over the Roth IRA. What advantage does the traditional IRA have over the Roth?

Two of the most important considerations when saving for retirement is the time you have to save and the return you earn on your savings.

Relate the 7 steps to funding your retirement needs. What is the hardest part?

Today, the typical American worker will receive a defined-benefit retirement plan from their employer.

The system of Social Security is based on young working people paying taxes to support older retired people. The dependency ratio is the number of workers to retirees. Forty years ago it was 16 workers for every one retiree. What will happen to this ratio by the year 2048?