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Personal Finance: Retirement Planning
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Retirement planning refers to financial strategies of saving, investments, and ultimately distributing money meant to sustain oneself during retirement. Many popular investment vehicles, such as individual retirement accounts (IRAs) and 401(k)s, allow retirement savers to grow their money with certain tax advantages.
 

Personal Finance: Retirement Planning
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25 Questions

1. Which of the following benefits is not provided by Social Security?
2. Under a single life annuity, you receive a set monthly payment for the rest of your life.
3. One of the first steps in planning for your retirement is figuring out just what you want to do when you retire.
4. Your decision on what type of annuity to purchase will have a dramatic impact on the monthly payments you will receive upon retirement.
5. When planning the retirement payout, there are several options from which to choose- With the ________ option the annuity provides payments over the life of both you and your spouse.
6. Why have employers switched to defined-contribution plans instead of defined-benefits plans for most companies?
7. Alicia works two jobs and still makes very little income- Why is the Saver's Tax Credit a good idea for her?
8. A 'self-directed' retirement plan is one in which a plan administrator determines how much your contributions will be and what investment options you will have available.
9. Once May Lou starts receiving her $1,200 monthly annuity payments she will pay income tax as if the annuity were
10. Richard Harris wants to elect the single life annuity option for retirement- His mother lived to age 92 and his dad lived to be 89- This annuity will pay Richard a set monthly payment for as long as he lives- What possible disadvantage might he face?
11. One of the best things about retirement is that retirees don't have to pay income taxes once they retire.
12. The only difference between a defined-benefit plan and a defined-contribution retirement plan is the tax deduction for the defined-contribution plan.
13. What are the disadvantages of an ESOP retirement plan?
14. With a Roth IRA, after five years you can make withdrawals before age 59 1/2 without a penalty but you must pay taxes on the withdrawals.
15. Contributions to Roth IRAs are tax deductible.
16. Erica works for a company with a 401(k) plan- The company matches at $0.50 on the dollar the first 6% of the employee's salary contributed to the 401(k)- If Erica earns $90,000 and contributes % of her salary, how much will the employer match be in dollars for the year?
17. For low income senior households Social Security is a very important financial asset.
18. As a young consumer you would be wise to be very cautious with your investing and avoid investing in stocks.
19. Which of the following statements about saving for college is not true?
20. Alex works for a company with a 401(k) plan- He currently earns $80,000 in gross salary and contributes 8% of his gross salary into his 401(k) account- If his marginal tax rate is 33%, how much income tax liability is he saving by participating in his 401(k)?
21. Social Security is a mandatory insurance program that provides a base level of protection for all of the following occurrences except one- Choose that one.
22. Under a defined-contribution plan, your employer alone or you and your employer together contribute directly to an individual account set aside specifically for you.
23. Rihab just got a new job and wants to roll over her retirement account from her previous job at a large corporation into an IRA- Which of the following is true?
24. Anyone can open up an IRA account but not everyone may get tax-advantages from it because there are income limitations.
25. Jose does not have a retirement plan at work- He currently earns $30,000 in salary and is in the 15% marginal tax bracket- If he contributes the maximum contribution of $5,500 to his traditional IRA, how much money will he save on his income tax liability?

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