EPF U10_4 Investing for Retirement

1. Why will you need slightly more income in each year of your retirement?

• 1. Your expenses increase the longer you are in retirement.

• 1. Your rate of return on investments is guaranteed to increase in retirement, so you can spend more each year.

• 1. You are required to withdraw more money each year from your retirement account

• 1. You should take the increasing price of goods and services over time into account.

  
  

2. How can the length of your retirement impact how much you might need to save for retirement? (hint: choose two right answers)

• 1. The longer your retirement, the MORE money you'll receive in government stipends and programs.

• 1. The longer your retirement, the MORE you need to have saved.

• 1. The longer your retirement, the LESS money you'll be able to withdraw each year.

• 1. The longer your retirement, the LESS you need to have saved.

3. Which of the following should you do when taking your rate of return into account?

• 1. Assume an aggressive rate of return because that is what the market guarantees.

• 1. Assume an aggressive rate of return because it accounts for other income streams, such as Social Security.

• 1. Assume a conservative rate of return so that you can plan the worst but hope for the best.

• 1. Assume a conservative rate of return because that is how the market is going to perform.

4. Why does the amount you need to save for retirement increase from 1.5M to over 2.1M in this example?

• 1. You'll need more money each year in retirement.

• 1. The federal government contributes to your annual savings once you open a retirement account

• 1. You're assuming you're going to earn more each year so you can contribute more.

• The increased amount each year takes inflation into account

A 401(k) plan is a: 

• special type of business plan

• bank account specifically for entrepreneurs

• benefit for workers making $401,000 or less

• benefit that helps workers invest for retirement

About how much more does money grow when it’s invested rather than deposited in a traditional savings account?

• About 10 times more

• About 50 times more

• About 100 times more

• About 1,000 times more

How can you invest for retirement if your employer does not offer a 401(k) plan?

• You simply wouldn’t be able to invest

• • Open an Individual Retirement Account
    

• Open a 401(k) from a relative’s employer

• Open a 501(c)(3) instead

How much of your income do experts recommend investing in a 401k account?

• 5%

• 7%

• 10%

• 25%

Financial experts agree that in order to grow your investments as much as you can, it is important to keep your ______ as low as possible.

• annual contributions

• annual fees

• quarterly taxes

• quarterly dividends

1. Select the best definition of an IRA.

• 1. An IRA is a tax-advantaged investing tool set up by individuals for retirement savings

• 1. An IRA is a retirement plan offered to you by your employer

• 1. An IRA is an investment type with a fixed rate of return

• 1. An IRA is a retirement savings plan that guarantees a fixed rate of return