Exam 14: Planning for Retirement

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -The employee will be responsible for making investment choices when the employer offers a [401(k)plan | defined benefit plan].

Qualified retirement plans provide employees with tax benefits.

Social security is meant to be a retirement income supplement.

Lillian has a defined benefit plan that promises a 2% annual retirement benefit based on the average of her last three years of salary.At retirement Lillian has 15 years of service and an average salary over the last three years of $65,000.What will her annual benefit be?

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -Most people invest their retirement funds too [aggressively | conservatively].

When one estimates retirement needs,you start with a projection of expenses stated in future dollars.

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -With a [fixed rate | variable] annuity,you would receive a guaranteed payment regardless of the activity of the investment funds.

Household expenses usually increase after retirement.

A Roth IRA

Fully insured status requires 40 ____ of employment covered by social security.

There are early withdrawal penalties for all of the following except

It is extremely wise to contribute at least as much to a 401(k)plan as one's employer will match.

Annuities may guarantee proceeds for a specific period or for a specific amount.

Earnings limitations on Social Security benefits cease at age

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item 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].

Supplemental retirement plans are usually voluntary.

Whether or not social security benefits will be subject to income taxes depends on the age of the recipient.

A $2,000 annual contribution to a retirement account earning 6% will be worth ____ in 20 years.

____ are exclusively for the self-employed person and his/her employees.

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