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Exam 14: Planning for Retirement

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Question 71

Multiple Choice

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Gordon and Lisa estimate that they will need $1,875,000 in 40 years for their retirement years.If they can earn 8 percent annually on their funds,how much do they need to save annually?

A) $7,238
B) $7,987
C) $8,103
D) $9,234
E) $9,875

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

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Question 72

Multiple Choice

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Employers who want flexibility in how much they contribute to their employees' retirement plans would want to consider adopting a _____ plan.

A) qualified defined contribution
B) cash balance
C) defined benefit
D) profit sharing
E) 403(b)

F) D) and E)
G) None of the above

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Question 73

Multiple Choice

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Which is not a common mistake people make when planning for retirement?

Workers,born in 1960 or later,who elect to retire early-at age 62-will receive reduced Social Security benefits,currently _____ of the full amount

Which of the following types of retirement plans is becoming less common?

The major mistake people make in retirement planning is:

Danielle puts 8 percent of her paycheck in a 401(k)plan administered by her employer.Danielle earns $55,000 per year and is in the 28 percent tax category.What annual tax savings does she get from her contribution? If her employer matches contributions on the first 5% of her salary dollar for dollar and the second 5% 50 cents on the dollar,how much will her employer put into her account this year?

SEP plans are designed for self-employed individuals.

The two most common sources of retirement income for most people are Social Security and pensions.

Choose the word or phrase in [ ] which will correctly complete the statement.Select "a" for the first item,"b" for the second item,and "c" if neither item will correctly complete the statement. -A defined [contribution | benefit] retirement plan would usually be better for a younger worker who changes employers every five years.

Marcia works for Telephonic Industries and participates in its thrift and savings plan.For every $1.00 Marcia contributes to the plan,up to 4 percent of her salary,the company contributes $0.50.Which of the following accurately describe this plan?

Choose the word or phrase in [ ] which will correctly complete the statement.Select "a" for the first item,"b" for the second item,and "c" if neither item will correctly complete the statement. -The employee is subject to the investment risk in a defined [contribution | benefit] plan.

In long-term retirement planning you decide on the required level of retirement income and funds needed over a 3 to 5 year series of intervals.

Choose the word or phrase in [ ] which will correctly complete the statement.Select "a" for the first item,"b" for the second item,and "c" if neither item will correctly complete the statement. -[SEP | Keogh] plans are easier to establish.

_____ do not have to be covered by Social Security coverage.

Home Appliance Warehouse,Inc.would like to set up a retirement plan for its employees that encourage employees to save for their own retirement.The company is willing to match employee contributions.Which of the following plans would be appropriate in this situation?

The major mistake people make in retirement planning is:

Annuities are administered by:

Eric works for a company with a defined contribution benefit pension plan.He will retire in ten years (at age 65)and expects his salary to be $100,000 in his last year of work.Social Security should pay him $1,325 per month at that time.If he needs 80 percent of his income to maintain his standard of living upon retirement,how much annual income will he need from his employer's plan and from his own planning when he retires?

Choose the word or phrase in [ ] which will correctly complete the statement.Select "a" for the first item,"b" for the second item,and "c" if neither item will correctly complete the statement. -Inflation will have [little | great] impact on your retirement plans.