Chapter 10 - Retirement

10-1. A savings account opened by an individual that is contributed to monthly not provided by an employer.

• Tax-deferred.

• Individual Retirement Plan (IRA)

• 401k Plan

• Social Security

10-1. A retirement savings plan that is sponsored by an employer for its employees.

• 401k Plan

• Individual Retirement Account (IRA)

• Retirement

• Social Security

Tax-deferred means...

• You do not have to pay income tax on the money until you begin to withdraw it at retirement

• You pay income tax on the retirement contributions when you deposit them

10-1. Jay just graduated from college and he has decided to open a retirement account that pays 1.75% interest compounded monthly. If he has direct deposits of $100 per month taken out of his paycheck, how much will he have in the account after 42 years?

• $74356.50

• $121,986.24

• $186,578.65

• $96,548.73

10-1. Fiona opened a retirement account that has an annual yield of 6%. She is planning on retiring in 20 years. How much must she deposit into that account each month so that she can have a total of $600,000 by the time she retires?

• $1,298

• $795

• $842

• $955

10-1. Reece opens a retirement account with an APR of 4.1%, compounded monthly. He is planning to retire in 15 years. About how much will he have in the account when he retires if he deposits $750 a month? (FUTURE VALUE)

• 186084.60

• 405595.80

• 1000000

• 2.07

10-1. Mitch opened a retirement account that has an annual yield of 2.2% compounded monthly. He is planning on retiring in 13 years. How much must he deposit into that account each year so that he can have a total of $1,000,000 by the time he retires? Round to the nearest $10,000 dollars. (PRESENT VALUE)

• 50000

• 5000

• 6000

• 70000

10-2. Federal insurance program that provides benefits to retired people and those who are unemployed or disabled.

• 403(b) Plan

• Retirement

• Social Security

• Traditional IRA

10-2. In 2016, the maximum taxable income for SS was $118500, and tax rate was 6.2%. What is the max you could have paid in 2016?

• 8250

• 7347

• 73470

• Impossible to tell without more info

10-2. In 2018, the maximum taxable income for Social Security was 128,700 dollars and the tax rate was 6.2%. Alex switched jobs in 2018 from the credit union to the hospital. When he worked for the credit union he made $67,010 and the hospital paid him $72,200. Each employer took out 6.2% out for social security taxes. How much did Alex overpay for social security in 2018?

• $8,631

• $7,979

• $652

• $1,130