Retirement PlanningTest Review

True/FalseTo keep from running low on

money during retirement, you should first find a job to increase

your income.

False

True/FalseTo prevent running short of

money during retirement, you should first rethink your

retirement goals and lifestyle.

True

True/FalseIf you have a retirement account, you cannot access the funds until

you officially retire.

False

True/FalseIf you have a retirement account, you can access the funds at any

time, even though you pay a penalty to do so.

True

What is the risk that you have been tricked or deceived when

making an investment?

Fraud Risk

What type of IRA is when the money invested is “after-tax”

money?Hint: You pay the tax before

placing the money in this IRA

Roth

What type of IRA is when the money invested is “before-tax”

money?Hint: You pay taxes on this

money when you take it out of the IRA.

Traditional

Asking yourself how much money I will need and how many years will I need it is one of the

steps for?

Planning for Retirement

The greater the potential to gain higher earnings, the

(greater/lesser) the risk.

greater

What is a company sponsored plan where you determine how

to invest your money?

401(k) plan

At what age are you required to start drawing income from your

IRA?

59 1/2

What are most IRAs invested in?

Mutual Funds

What is the highest percentage of income for people over the

age of 65?

Social Security

What is the average amount of a Social Security check?

$1,000

What does IRA stand for?

Individual Retirement Account

True/FalseOnly people who work for employers with retirement

benefits can plan for retirement.

False

True/FalseAll companies contribute to

retirement accounts for their employees.

False

True/FalseParticipating in company-

sponsored accounts is mandatory in all situations.

False

True/FalseEven though participating in

company-sponsored accounts is voluntary, it is something that all

employees should do.

True

What can decrease your retirement funds?

Inflation

True/FalseThe best way to protect yourself

from fraud risk is to ask your friends for suggestions before

investing.

False

True/FalseOne of the best ways to protect

yourself from fraud risk is to keep your money in a savings

account at a local bank.

False

True/FalseOne of the best ways to protect

yourself from fraud risk is to invest only with reputable

companies.

True

What is the potential risk that you will lose your money due to

a company going bankrupt?

Financial Risk

True/FalseIf your company has a retirement plan, you can wait until you are in your 40s to start participating

without any costs.

False

True/FalseIf your company has a retirement plan, you should sign up as soon as possible so your investment

will start growing.

True

Annuities provide a _____ amount each month.

guaranteed

_____ is based on the earnings of the investment.

401(k)

True/FalsePeople invest even though risk is involved because the potential to make money is greater than the

risk of losing it.

True

What is a risk management strategy where you include a wide variety of investments

within your portfolio?

Diversification

What type of risk is losing money instead of appreciating?

Market Risk

Social Security was originally designed to be a _____ income for people over the age of 65.

Supplemental

True/FalseMost people plan to work until

they are 60 years of age.

False

True/FalseMost people plan to work more

years than they actually do.

True

True/FalseWhen planning for retirement,

you need to determine how much money you will need and

how many years you will need it.

True

What is a statistical measure of the average life span of a specific

population?

Life Expectancy

True/FalseWhen inflation occurs at a lower

rate than you calculated, your retirement benefits could be less

than expected.

False

True/FalseWhen your rate of return is

lower than you had calculated, your retirement benefits could

be less than expected.

True