Chapter 10 Planning for Retirement

Which of the following is NOT a retirement plan option

• Net income

• 401k

• Pension

• 403b

Using the future value of a periodic deposit investment formula on pg 609:

Ricky is 35 years old. He plans to retire when he is 63. He has opened a traditional retirement account that pays 1% interest compounded monthly. If he makes monthly deposits of $400, how much will he have in the account by the time he retires?

• $115,234.33

• $120,533.44

• $155,028.26

• $75,000

What is an IRA?

• A retirement account opened by your employer

• A retirement account that is opened by an individual

What is the difference between a 401k and 403b plan? (read carefully)

• 401(k) are retirement savings plans sponsored by an employer that is a for a non profit company while a 403(b) are retirement savings plans for profit/educational companies

• 401(k) are retirement savings plans sponsored by an employer and 403(b) plans are set up by an individual

• 401(k) are retirement savings plans set up by the individual and 403(b) are savings plans set up by a company

• 401(k) are retirement savings plans sponsored by an employer that is a for profit company while a 403(b) are retirement savings plans for non-profit/educational companies

Madison earns $1,050.33 each pay. How much will be deducted for Social Security taxes?

• $65.12

• $16.94

• $62.12

• $37.50

Why was Social Security created? (choose all that apply)

• To help provide a financial safety-net for retirees after the Stock Market crash of 1929.

• To help provide financial assistance for people who are unable to work

• To make Mrs. Keesecker RICH

• To make sure that older people were happy

In 2016, the maximum taxable income for Social Security was $118,500 and the tax rate was 6.2%. What was the maximum amount one person could have paid into Social Security?

• $5,000

• $7,347

• $6,200

• $1,500

Which Life Insurance Option has a cash value?

• Whole

• Term

Which life insurance policy has a termination date?

• term

• whole

What kind of life insurance policy is a good investment for a young, healthy person?

• whole

• term