Finance Final Chapter 14

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If you don't have enough money to retire you may need to:
1. increase savings
2. rely on family
3. rely on public assistance
4. all of the above


Compared to a traditional IRA, a Roth IRA:
1. is easier to set up
2. has a lower minimum age for tax-free withdrawals
3. allows investments to accumulate tax-free, whereas a traditional IRA does not
4. allows deductible contributions, whereas a traditional IRA does not


If your retirement benefit is based on years of service and a percentage of your highest salary, you are enrolled in a:
1. defined benefit plan
2. defined contribution plan
3. fixed salary plan
4. variable salary plan


If no changes are made, Social Security will be unable to pay all promised benefits beginning in approximately which year?
1. 2019
2. 2051
3. 2017
4. 2041


The Social Security reserve is:
1. Increasing
2. Decreasing
3. Staying about the same
4. There is no reserve


To build adequate retirement savings, a person should:
1. Start saving as soon as possible
2. Save regularly
3. Use tax-advantaged savings plans
4. All of the above


Traditional financial planning assumes that:
1. Workers will need less income after retirement
2. Workers will need about the same income after retirement
3. Workers will need more income after retirement


Which of the following retirement savings plans offers the best estate planning opportunities?
1. 401(k)
2. IRA
3. Roth IRA
4. 403(b)


The number of employers offering pension plans is:
1. Staying about the same
2. Decreasing
3. Increasing


Social Security is funded by:
1. A tax on employees
2. A tax on employers
3. A tax on self-employed people
4. All of the above


A defined benefit plan:
1. Provides health insurance for employees
2. Promises specific monthly payments after retirement
3. Promises specific payments to a savings plan while you are working
4. None of the above


Based on current projections, Social Security will be able to pay all promised benefits:
1. For the next decade or so
2. Until sometime in the 2040's
3. Until sometime in the 2070's
4. None of the above


Which of the following is true about retirement income?
1. Women have higher retirement income than men
2. Women and men have about the same amount of retirement income
3. Men have higher retirement income than women
4. There are no statistics that compare the retirement income of men and women.


A retirement plan that promises a specific payment to a savings plan each payday is known as a:
1. Defined contribution plan
2. Defined retirement plan
3. Defined payment plan
4. None of the above


Pension plans are insured by the:
1. Federal Deposit Insurance Corporation
2. Employee Retirement Income Security Act
3. Pension Benefit Guarantee Corporation
4. None of the above


The triad of a happy retirement includes:
1. Social Security, pension plans, and personal savings
2. Health insurance, retirment income, and personal savings
3. Health, money, and free time
4. None of the above


Which of the following is a defined benefit plan:
1. A 401(k) plan
2. A traditional IRA
3. A Roth IRA
4. None of the above


What is the withdrawal rule for a traditional IRA?
1. You can make withdrawals before age 59½, but you must pay a 10% penalty
2. All withdrawals are taxable
3. Both of the above
4. None of the above


Based on current projections, Social Security:
1. Will be able to pay all promised benefits
2. Will be around, but will not be able to pay the full promised benefits
3. Will become bankrupt in 2044 and no further payments will be made
4. There are no reliable projections

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