Standard 6: Retirement Planning

Which one of the following events could make your retirement benefit LESS than expected?

• Inflation occurs at a lower rate than you calculated.

• Your rate of return is lower than you had calculated.

• You earn a larger retirement benefit than you had calculated.

• You inherit money you had not anticipated.

Life expectancy refers to

• Your perception of how long you expect to live.

• An estimate of how much money you need for retirement.

• A statistical estimate of the number of years you will live in retirement.

• A statistical measure of the average life span of a specific population.

When planning for retirement, you need to determine

• how much money you need to live in a nursing home or retirement center.

• how much money you want your children to inherit.

• how much money you will need and how many years you will need it.

• where you plan to live after you quit working.

Most people plan to work

• more years than they actually do

• until they are 60 years of age.

• only until they qualify for their company retirement.

• until they are fired or forced to retire.

Which of the following statements about Social Security is the MOST accurate?

• Even if you do not start saving and planning for retirement, you will earn enough money from Social Security to maintain your current lifestyle.

• Social Security was originally designed to be a supplemental income for people over the age of 65.

• Because Social Security is a government program, it is guaranteed to be there when you retire.

• The average income from Social Security is about $40,000.

If you are concerned about your investment losing money instead of appreciating, then you are worried about ______________ risk.

• market

• inflation

• fraud

• financial

As a young person, saving for your retirement is an example of a ________________ goal.

• short-term

• medium-term

• value-added

• long-term

Diversification refers to

• the portion of your retirement investment in stocks versus bonds.

• your ability to eliminate risk from your retirement planning strategies.

• a risk management strategy where you include a wide variety of investments within your portfolio.

• selecting investment options that you know the most about to increase your rate of return.

Why do people invest when risk is involved?

• Because they do not understand that investing is risky.

• Because the talk about risk is really overstated; investing is a safe bet.

• Because the potential to make money is greater than the risk of losing it.

• Because they are greedy and believe they can beat the odds to become a millionaire.

The primary difference between an annuity and a 401(k) is

• annuities provide a guaranteed amount each month after retirement and income from a 401(k) is based on the earnings.

• . a 401(k) provides a guaranteed amount each month after retirement and annuities pay only what was earned from investments.

• most annuities generate more retirement income than most 401(k)s.

• annuities are insured by the federal government and 401(K)s are not.