Exam 16: Retirement Planning

For low income senior households Social Security is a very important financial asset.

With an IRA your investment choices include stocks, bonds, mutual funds, CDs and real estate.

Reggie has two children. He is wanting to put money away for their college education. What type of plan can only be used for college and graduate school, and allows contributions of up to $250,000?

What is the purpose of a rollover when it comes to retirement plans?

What are the disadvantages of an ESOP retirement plan?

Social Security is a mandatory insurance program that provides a base level of protection for all of the following occurrences except one. Choose that one.

An employee's Social Security contributions are invested in a general fund account and will be made available for the employee at retirement.

Congratulations! You have just retired with $1.4 million dollars in your 401(k) plan. You will be receiving a fairly large Social Security check and you have adequate personal savings outside of your 401(k) to live on for several years. You don't want to lock up your retirement money into an annuity because you want to be flexible for the future. What would be your best option?

Under a defined benefit plan you receive a promised or "defined" benefit payout at retirement.

If you have a defined-benefit retirement plan, you're considered an "inactive participant."

One of the drawbacks to defined-benefit plans are their lack of portability, meaning that if you leave the company the value of the pension is not likely to go with you.

Defined-benefit pension plans are generally ________ and they lack ________.

Explain why we do not invest in Social Security. What are the four basic benefits for those who are qualified?

A(n) ________ retirement plan is one in which the company will contribute shares of company stock into the employee's account in place of a cash contribution. The employee does well if the company stock appreciates in value, but can suffer dramatically if the stock depreciates in value.

Anyone can open up an IRA account but not everyone may get tax-advantages from it because there are income limitations.

Are retirement plans different for the self-employed and employees of small businesses? Do you have to work full-time to qualify for one?

What are the advantages to a SIMPLE plan for retirement for the small business owners?

Under a funded pension plan, the employer makes regular contributions to a trustee who collects and invests the retirement funds.

Individual retirement arrangements (IRAs) are personal savings accounts that give you tax advantages for saving for retirement.

Like many Americans you know that you must plan your retirement funds carefully because there may be a discrepancy between the funds that you will need to survive on during retirement and the income that you will have available during retirement. What will likely be the relationship between fund needs and income available during retirement for MOST Americans?