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Retirement Planning Flashcards | StudBud
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Retirement Planning
Retirement Planning
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1
The potential risk that you lose money due to a company going bankrupt is called ___ risk.
Fruad
Corporate
Financial
Market
2
The risk that you have been tricked or deceived when making an investment is called
financial risk
inflation risk
market price risk
fraud risk
3
IRAs are
Inflation Resistant Accounts
Integrated Retirement Accounts
Individual Retirement Authorities
Individual Retirement Accounts
4
Which of the following events will decrease your retirement funds?
Inflation increases by 10%, making prices more expensive now
Inflation decreases 2% but your investment keeps at 10%
You make regular contributions to your retirement account
Your employer matches your contributions to your retirement
5
Which one of the following events could make your retirement benefit LESS than expected?
Inflation occurs at a lower rate then you calculated
You earn a larger retirement benefit than you had calculated
You inherit money you had not anticipated
Your rate of return is lower than you calculated
6
A company sponsored plan where you determine how to invest your money is called a(n)
pension plan
annuity
401(k) plan
IRA
7
Most people plan to work
until they are fired or forced to retire
until they are 60 years of age
only until the qualify for their company retirement
more years than they actually do
8
When planning for retirement, you need to determine
how much money you need to live in a nursing home
how much money you want your kids to inherit
where you plan to live after you quit working
how much money and for how long will you need it
9
When investing, the basic rule is: The GREATER the potential to gain higher earnings, the
lower the level of risk
greater the potential for fraud
higher the level of risk
less likely you are to invest
10
If you have a retirement account,
you cannot access the funds until you officially retire
your opportunity cost for borrowing from it is very low
you can access funds at any time but you have to pay penalty
it is a good strategy to borrow frequently against it
11
If your company has a retirement plan,
wait until bills are paid before saving money
wait until you are in your 40s to start participating
only people who plan on retiring early can participate
sign up as soon as possible so investment will start growing
12
If you are concerned about your investment losing money, you are worried about ___ risk.
market
fraud
inflation
financial
13
Which of the following statements about Social Security is MOST accurate?
Designed as supplemental income for people over 65
You earn enough from Social Security to maintain lifestyle
Average income from Social Security is $40,000
It is guaranteed when you retire
14
Most IRAs are invested in
bonds
gold and silver
stocks
mutual funds
15
The BEST way to protect yourself from fraud risk is to
ask your friends for suggestions before investing
keep you money in a saving account at a local bank
invest heavily in jewelry and gold
invest only with reputable companies
16
As a young person, saving for your retirement is an example of a ___ goal.
short-term
value-added
medium-term
long-term
17
Life expectancy refers to
a statistical measure on average lifespan of a population
an estimate of how much money you need for retirement
your perception of how long you expect to live
a statistical estimate of years you will live in retirment
18
Why do people invest when risk is involved?
Because they do not understand that investing is risky
Because they are greedy and believe they can beat the odds
Because the talk about risk is really overrated
Because the potential to make money is greater
19
If you have an IRA, you are required to start drawing income from it at age
50
59.5
62.5
55
20
Diversification refers to
selecting investment options you know the most about
risk management strategy with a wide range of investments
ability to eliminate risk from retirement planning
portion of retirement in stocks versus bonds
21
The primary difference between an annuity and a 401(k) is
401k provide guaranteed amount & annuity is based on earning
annuities are insured by the government and 401(k)s are not
most annuities generate more retirement income than 401(k)s
annuities give guaranteed amounts & 401k is based on earning
22
The HIGHEST percentage of income for people over 65 comes from
Social Security
retirement accounts
other assests
employment benefits
23
Which of the follwoing is a characteristic of a Roth IRA?
Money invested into a Roth is "before-tax" dollars
Money is deposited into a Roth by your employer
Money invested into a Roth is "after-tax" dollars
Money cannot be taken out until retirement once deposited
24
Which of the following statements is TRUE?
Company-sponsored plans are optional but everyone should do
Only people with company plans can plan for retirement
Companies contribute to retirement accounts for employees
Participating in company-sponsored accounts is mandaroty
