Exam 10: Planning for Retirement

What is the full retirement age,the age at which a person receives full Social Security benefits,of a person born after 1962?

Natalie's employer uses a final-average formula to calculate pensions.This type of pension is based on a fixed percentage of the average earnings of the employee's last several years.

This type of life insurance has an investment portion and an insurance portion.The investment portion has a cash value and the insurance portion pays a death benefit.If the policyholder wants to change the death benefit,he or she must apply for a new policy.

What is the number of Social Security credits a worker needs to earn over his or her working lifetime to collect Social Security benefits?

Mr.Casem is preparing to retire after 31 years with his company.He set up this spreadsheet to calculate his pension,which is based on his most recent three -year average salary,number of years of service,and a 2% multiplier.What are the formulas for cells D1 and D4? What are the resulting values? ​ What are the formulas for cells D1 and D4? What are the resulting values?

Nina's employer offers a pension plan that is the product of the career average of her salaries while working there,the number of years of service,and a 1.75% multiplier.She calculates the average of her 17 years of salaries to be $54,000.What is her monthly pension?

Cameron started contributing $400 per month to a retirement account when he was married at the age of 26.The account earned 8.7% compounded monthly until Cameron's finances changed when he was 48.His first child started college that year.Cameron didn't want to pay taxes or a penalty on an early withdrawal,but he did stop his monthly contributions to help pay for college.He moved the money in the account to a more conservative investment paying 4.9% compounded monthly until he was 60 and could begin withdrawing funds without penalty.Now Cameron wants to withdraw $2,500 per month to supplement his pension.How old will Cameron be when the money in this account runs out?

What is the difference between an IRA and a 401k?

Fulton has been paying $150 per month for a $200,000 whole life insurance policy for the past 29 years.It has a cash value of $128,000.He recently heard that the S&P 500 has averaged an 8.7% annual return over the past 35 years.If he had invested the premiums in stock funds instead,would his balance be enough to offset the death benefit if he died tomorrow?

In 2016,the maximum taxable income for Social Security was $118,500,and the rate was 6.2%.The rate for Medicare tax was 1.45%.If Jessica's taxable income as an attorney was $152,000 that year,how much did she pay in FICA taxes?

Sherlock invested a $100,000 reward for making sure an embezzler was caught and sent to prison into various types of investments.He invested 20% in corporate bonds,25% in income stocks,15% in growth stocks,10% in penny stocks,and the remainder in a 10-year certificate of deposit.During the next year,the corporate bonds earned 7%,the income stocks earned 13%,the growth stocks earned 21%,the penny stocks lost 67%,and the CD earned 2%.At the end of the year,what percent change did Sherlock see in his portfolio?

Cecile is 23 years old and wants to retire when she is 55.She opens up a retirement account and makes a $400 deposit each month.If the account pays 2.75% interest compounded monthly,she will have about $245,842.67 in her account when she is 55.

Isaiah's employer has a pension plan that pays 2.2% of the average of his highest three-year salary for every year worked.Isaiah has been with this company for 15 years,and his last three years' salaries were $77,500;$81,000;and $81,500.What will his monthly pension amount be after three years in retirement if the cost-of-living adjustment is 2.5% per year?

Juan changed jobs in 2016.He earned $67,233 working at an insurance company for the first 7 months of the year.When he switched jobs to a textbook company,he was able to negotiate a higher salary and earned $76,144 for the remainder of the year.How much can Juan expect his tax refund to increase in 2016 due to overpaying Social Security taxes?

New York Life sells a five-year term insurance policy with a face value of $250,000 to a 50-year old man for a monthly premium of $75.00.Using the mortality table below,determine the probability that the customer lives until he is at least 55. ​ ​

Jackson inherited $50,000 at the age of 42 and had a decision to make.He could deposit the money in a tax -deferred account that pays 3.375% compounded quarterly or he could deposit the money in a taxable account with the same interest rate and compounding period.Jackson's current tax bracket is 25%,which means he will have to pay taxes on the interest earned each year in the taxable account.How much money could Jackson have saved after 25 years if his decision was to deposit the inheritance into the taxable account?

Mr.Jenkins is almost 67 years old and is preparing to retire.Over his life,he earned an average of $3,750 per month after adjusting for inflation.The formula for calculating monthly Social Security benefits is 90% of the first $856 earned,then 32% of the earnings over $856.What will Mr.Jenkins' monthly benefit be?

An insurance company sells a 20-year term life insurance policy with a face value of $200,000 to a 45-year -old woman.Her annual premium is $990.If the woman dies after paying premiums for 6 years,what is the insurance company's gain or loss?

Social Security benefits are need-based and are not based on your earnings over your working lifetime.

What is a mortality table?