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Exam 18: Starting Early: Retirement Planning

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Question 31

Multiple Choice

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Sam Waterston has been making contributions into an individual retirement account to help pay for his children to go to college. Which type of account is he most likely using?

A) Traditional IRA
B) Roth IRA
C) SEP-IRA
D) Coverdell Education Savings Account
E) Rollover IRA

F) D) and E)
G) B) and E)

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Question 32

Multiple Choice

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An annuity in which you receive an income for the rest of your life, but no payments are made to anyone after your death is called:

A) straight life annuity.
B) life annuity with installment certain.
C) installment refund annuity.
D) a life with period certain annuity.
E) Keogh annuity.

F) A) and B)
G) B) and D)

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Question 33

Multiple Choice

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At a 3 percent rate of inflation approximately how many years will it take for prices to double?

Your mortgage, car payments, credit card balances, and taxes due are all examples of your liabilities.

Employees who are covered under the Railroad Retirement System are also covered by Social Security.

What are the possible sources of income for retirees?

Under certain circumstances, the Roth IRA allows for penalty-free withdrawals as well as tax-free distributions.

Under a 401(k) plan, you can elect to have your employer make nontaxable contributions to the plan for your benefit and reduce your salary by an offsetting amount.

Social Security is the most widely used source of retirement income.

What types of housing options are available to retirees?

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

The Employee Retirement Income Security Act of 1974 (ERISA) sets minimum standards for pension plans in private industry.

The law exempts Social Security benefits from federal income taxes.

Ted Riley owns a vehicle worth $25,000 and a home worth $225,000. He has a checking account balance of $500, a savings account balance of $1,500, and a mutual fund worth $85,000. His personal assets are worth $90,000. He still owes $10,000 on his car, $100,000 on his home, and $1,000 on his credit card. What is Ted's net worth?

If a rollover from a retirement fund or other IRA is not made directly to a similar employer-provided retirement plan or an IRA, there will be a mandatory federal income tax withholding equal to what percent of the taxable distribution?

Social Security is a package of protection, providing retirement, survivors', and disability benefits.

Which type of housing is designed to allow people to stay in their homes as they grow older?

Which one of the following expenditures for retirees is most likely to decrease?

Beverly Foster is planning for her retirement. She has determined that her car is worth $10,000, her home is worth $150,000, her personal belongings are worth $100,000, and her stocks and bonds are worth $300,000. She owes $50,000 on her home and $5,000 on her car. What step in the retirement planning process is Beverly completing?

Staying in their present home is the alternative preferred by most people who are approaching retirement.