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Exam 18: Starting Early: Retirement Planning

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Question 71

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Social Security should be the only source of your retirement income.

A) True
B) False

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Question 72

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Explain the difference between a defined-contribution and defined benefit plan.

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A defined-contribution plan has an indiv...

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Question 73

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Which of the following is typically a characteristic of a defined benefit plan?

The amount of the minimum required distribution from a 401(k)at age 70½ is based on your life expectancy at the time of the distribution.

You can keep money in most retirement plans indefinitely.

With a defined-contribution plan,the plan document specifies the benefits promised to the employee at the normal retirement age.

Your expenses for leisure activities will probably decrease during retirement.

Pension plan portability enables you to carry earned benefits from one employer's pension plan to another's when you change jobs.

If a marriage lasted more than 15 years,the marital assets are generally split 50-50 if the couple divorces.

Nancy Moore is planning for her retirement.She guesses that by the time she retires her mortgage will be paid off on her home.She expects she will pay $600 a month on food and that her medical expenses will be $400 a month.She also estimates that she will spend $400 a month on things that she enjoys like traveling,going to concerts,reading and other similar activities.What step in the retirement planning process is Nancy completing?

Sarah Logan is a professor at a public university.Her employer makes nontaxable contributions to a plan in her name and reduces her salary by the same amount.What type of retirement plan does Sarah have?

Why is it important to review your assets and liabilities before your retirement?

The potential loss of buying power during inflation is what makes it so important to plan ahead for your retirement.

The people who are in the best position to save are:

Some retirement planning experts suggest that you start retirement planning while you are:

Karen Endicott is planning for her retirement.She knows that after she retires she will no longer need her own single family dwelling.She plans on buying a condominium in Chicago,close to the bus and train line and close to a grocery store.What step in the retirement planning process is Karen completing?

Keogh plans can be both defined-contribution and defined-benefit plans.

Saving money doesn't come naturally to many young people.

John Carpenter works as a manager of a retail store.His employer has been setting money aside for him each month in the amount of 7 percent of his monthly earnings.What type of retirement plan does John have?

Which of the following is(are) a feature of an Education IRA?