Exam 14: Planning for Retirement

Will works for Micro Lance Computer Company and participates in its thrift and savings plan.For every $1.00 Will contributes to the plan,up to 5 percent of his salary,the company contributes $0.25.If Will's salary is $40,000 and he decides to maximize the matching contributions,how much will be contributed to Will's plan in a year by both the employer and Will?

Upon retirement,married couples automatically receive 1.5 times the higher earning spouse's Social Security benefit.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -The Social Security administration provides estimates of retirement benefits one could expect to receive in [current | inflated] dollars.

Household expenses usually increase after retirement.

Keogh and SEP plans provide tax deferred methods for the self employed to save for their retirement.

A ____ plan combines some of the features of a defined contribution plan with features of a defined benefit plan to produce a plan that is more portable than a traditional defined benefit plan.

A graded vesting schedule would legally have to give you some vesting rights if you worked at a company for 2 or more years.

Government assistance,primarily Social Security,is the largest single source of income for the average retiree.

The need for retirement planning is increased by the uncertainties of

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -If you need to withdraw your money from an annuity very soon after you begin making contributions,there most likely will be a [small | large] surrender fee.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -Beginning to put aside retirement funds at age 35 instead of 45 will make [very little | a great] difference in your total accumulated funds.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -Government research indicates that about [30 | 60] percent of households approaching retirement age have 401(k)accounts.

The amount of your social security contribution depends on

One can contribute up to $10,000 annually to a 401(k)plan.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -The income base on which social security tax is computed [increases each year | remains the same for long periods of time].

The Personal Earnings and Benefit Estimate Statement from Social Security would contain information about

Investment returns on annuities have outperformed mutual fund returns over the past five year.

Self-employed workers pay twice as much for Social Security coverage compared to employed workers.

In a Roth 401(k),contributions are tax deductible and withdrawals are taxable.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -With a life annuity,period certain,a payment will be made for a stated period of time [only to the annuitant if she lives | to someone else if the annuitant dies].