Upgrade to remove ads
Only $35.99/year

Personal Finance Chp 14

Terms in this set (92)

Which one(s) of the following is (are) misconceptions about retirement planning?
A. My expenses will drop when I retire.
B. My retirement will last only 15 years.
C. I can depend on government benefits.
D. I can depend on my company pension.
E. My expenses will drop when I retire, my retirement will last only 15 years, I can depend on
government benefits, and my company pension are misconceptions.
E. My expenses will drop when I retire, my retirement will last only 15 years, I can depend on
government benefits, and my company pension are misconceptions.
Which one of the following is a true statement about retirement planning?
A. I should update my retirement plan periodically.
B. My pension benefits will increase to keep pace with inflation.
C. Saving just a little bit won't help.
D. My employer's health insurance plan will cover my medical expenses.
E. Medicare will cover my medical expenses.
A. I should update my retirement plan periodically.
Which statement is correct about retirement planning of young professionals?
A. They don't want to retire with plenty of money.
B. They would rather save money now for retirement than spend it.
C. They are not worried about having enough money to retire comfortably.
D. Young people are in the best position to save.
E. Saving money does not come naturally to many young people.
E. Saving money does not come naturally to many young people.
How many years can you expect to spend in retirement?
A. 1 to 5 years
B. 6 to 10 years
C. 10 to 12 years
D. 12 to 16 years
E. up to 16 to 20 years
E. up to 16 to 20 years
Your first step in retirement planning is to:
A. estimate your spending needs.
B. analyze your current assets and liabilities.
C. adjust your spending needs for inflation.
D. evaluate your planned retirement income.
E. determine if you'll have to work during retirement
B. analyze your current assets and liabilities.
The people who are in the best position to save are:
A. middle aged.
B. young adults in their 20s.
C. people in their 30s.
D. teenagers.
E. elderly.
A. middle aged.
Some retirement planning experts suggest that you start retirement planning while you are:
A. in school.
B. in college.
C. in graduate school.
D. middleaged.
E. still employed.
A. in school.
You can determine your net worth by
A. subtracting your assets from your liabilities.
B. subtracting the value of your home from the mortgage balance.
C. adding your liabilities and assets.
D. subtracting your liabilities from your assets.
E. subtracting your expenses from your income.
D. subtracting your liabilities from your assets.
When a lender uses your house as collateral to buy an annuity for you from a life insurance
company, it is called:
A. an obverse annuity mortgage.
B. mortgage life insurance.
C. a reverse mortgage annuity.
D. a fixed annuity with level premium.
E. whole life insurance.
C. a reverse mortgage annuity.
You can get a reverse mortgage annuity if:
A. you are at least 55 years old.
B. you are five years from retirement.
C. your mortgage is largely or completely paid off.
D. you are recently retired.
E. you need a loan.
C. your mortgage is largely or completely paid off.
When you are nearing retirement, it is a good idea to:
A. increase the face value of your life insurance.
B. increase your property insurance coverage.
C. keep your life insurance intact.
D. decrease the face value of your life insurance.
E. swap your old life insurance policy with a new one.
D. decrease the face value of your life insurance.
Which statement is correct regarding retirement living expenses?
A. It is impossible to estimate your spending needs.
B. The exact amount of money you'll need is impossible to predict.
C. You'll use a smaller amount of money for food, housing, and medical care.
D. Your spending patterns will probably not change.
E. The exact amount of money you'll need can be accurately predicted.
B. The exact amount of money you'll need is impossible to predict.
Which one of the following expenditures for retirees is likely to increase?
A. insurance
B. federal income taxes
C. clothing expenses
D. workrelated expenses
E. provincial income taxes
A. insurance
Which one of the following expenditures for retirees is likely to decrease?
A. food and medical care
B. federal income taxes
C. expenses for leisure activities
D. medical expenses
E. insurance
B. federal income taxes
According to most financial planners, you will need about __________ percent of your current
pretax income to maintain your standard of living in retirement.
A. 50
B. 60
C. 70
D. 80
E. 90
C. 70
Which housing alternative is preferred by most persons who are approaching retirement?
A. house sharing
B. ECHO unit
C. accessory apartment
D. present home
E. boardinghouse/rooming house
D. present home
Which type of housing is designed to allow people to stay in their homes as they grow older?
A. Accessory apartment
B. ECHO unit
C. Rooming house
D. universal design
E. professional companionship arrangement
D. universal design
Many people make the move into retirement housing without:
A. considering seasonal factors.
B. experiencing many obstacles.
C. a spouse or companion.
D. doing enough research.
E. the proper accommodations.
D. doing enough research.
A(n) ____________ is appealing because it allows people to stay in their homes as they grow
older and frail.
A. accessory apartment
B. caretaker arrangement
C. commercial rental
D. universal design home
E. congregate housing
D. universal design home
Which one(s) of the following is(are) tips from retirement specialists on how to uncover hidden
taxes and other costs of a retirement area?
A. Contact the local Chamber of Commerce to get an economic profile.
B. Contact the provincial tax department to find out provincial, sales, and inheritance taxes.
C. Call a local accountant to find out which taxes are rising.
D. Rent for a while instead of buying immediately.
E. Contact the local Chamber of Commerce to get an economic profile, contact the provincial tax
department to find out provincial, sales, and inheritance taxes, call a local accountant to find out
which taxes are rising, and rent for a while instead of buying immediately are correct.
E. Contact the local Chamber of Commerce to get an economic profile, contact the provincial tax
department to find out provincial, sales, and inheritance taxes, call a local accountant to find out
which taxes are rising, and rent for a while instead of buying immediately are correct.
Which of these statements is correct about the Canada Pension Plan (CPP)?
A. The CPP dates back to 1996.
B. There are three types of CPP benefits.
C. CPP contribution is based on your age.
D. The federal government matches the CPP contributions of selfemployed individuals.
E. If you can begin receiving your CPP benefits at the age of 50.
B. There are three types of CPP benefits.
Possible sources of income for many retirees include
A. government benefits.
B. public pension plans.
C. employer pension plans.
D. personal retirement plans and annuities.
E. government benefits, public pension plans, employer pension plans, personal retirement plans and
annuities are possible sources of income.
E. government benefits, public pension plans, employer pension plans, personal retirement plans and
annuities are possible sources of income.
One of the following is not an advantage of the Canada Pension Plan retirement income:
A. earned income partially offsets benefits.
B. forced savings.
C. portable from job to job.
D. cost shared with employer.
E. survivorship rights.
A. earned income partially offsets benefits.
Over the last two decades, companies have switched their retirement plans from
______________ to _______________.
A. RPPs; GRRSPs
B. DPSPs; definedbenefits
C. defined benefits; defined contributions
D. defined contributions; defined benefits
E. DPSPs; defined contributions
C. defined benefits; defined contributions
Which employer pension plan has an individual account for each employee?
A. undefined contribution plan
B. defined contribution plan
C. defined benefit plan
D. undefined benefit plan
E. surplus employee plan
B. defined contribution plan
Which employer retirement plan specifies the benefits promised to the employee at the normal
retirement age?
A. defined contribution plan
B. undefined contribution plan
C. undefined benefit plan
D. defined benefit plan
E. surplus employee plan
D. defined benefit plan
What is the most popular personal retirement plan?
A. Deferred Profit Sharing Plan
B. Registered Pension Plan
C. Registered Retirement Savings Plan
D. Canada Pension Plan
E. New Seniors Benefit
C. Registered Retirement Savings Plan
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. fixedterm annuity.
B. life annuity.
C. installment refund annuity.
D. Registered Retirement Income Fund.
E. money purchase pension plan
B. life annuity.
Which of the following statements is false?
A. Payments for a life annuity can continue until death.
B. Transfers between annuity companies are taxfree.
C. Annuities are legitimate tax shelters.
D. An annuity has no investment limit.
E. Annuities provide opportunities for retirement income to grow.
E. Annuities provide opportunities for retirement income to grow.
The first step in stretching your retirement income is to make sure that you are
A. contributing to the CPP.
B. covered by an employer pension plan.
C. contributing to a RRIF.
D. saving funds in a RRSP.
E. receiving all of the income to which you are entitled.
E. receiving all of the income to which you are entitled.
To stretch your income during retirement, you could
A. skip leisure activities.
B. cut your food expenditures.
C. cancel your life and property insurance.
D. use your skills and time instead of your money.
E. not travel.
D. use your skills and time instead of your money.
Which of the following is not a public pension plan in Canada?
A. CPP
B. QPP
C. OAS
D. RRSP
E. ETA
D. RRSP
If a retiree wishes a predictable income in retirement, at the age of 69 she should transfer her
RRSP into a(n) _________________.
A. RRIF
B. Annuity
C. Mutual fund
D. Cash
E. GIC
A. RRIF
Which of the following requires mandatory contributions from workers earning in excess of
$3,500 a year?
A. Quebec Pension Plan (QPP)
B. Old Age Security (OAS)
C. Defined Benefit Pension Plan (DBPP)
D. Registered Retirement Savings Plan (RRSP)
E. Dividend Reinvestment Plan (DRIP)
A. Quebec Pension Plan (QPP)
An employee who is seeking the greatest security in her pension income would choose which of the following?
A. Deferred Profit Sharing Plan (DPSP)
B. Defined Contribution Pension Plan (DCPP)
C. Group Registered Retirement Savings Plan (Group RRS))
D. Defined Benefit Pension Plan (DBPP)
E. Dividend Reinvestment Plan (DRIP)
D. Defined Benefit Pension Plan (DBPP)
Be certain you don't let your ____________ birthday roll by without a comprehensive
retirement plan.
A. 25
th
B. 35
th
C. 45
th
D. 55
th
E. 65
th
B. 35
th
You can expect to spend about ________ years in retirement
A. 5 10
B. 11 15
C. 16 20
D. 21 25
E. 26 or more
C. 16 20
At age 65, what is the average life expectancy of a man?
A. 4 years
B. 7 years
C. 9 years
D. 12 years
E. 18 years
E. 18 years
At age 65, what is the average life expectancy of a woman?
A. 9 years
B. 12 years
C. 15 years
D. 21 years
E. 30 years
D. 21 years
Which statement is correct regarding retirement living expenses?
A. It is impossible to estimate your spending needs.
B. Your spending patterns will probably change.
C. You'll use a smaller amount of money for food, housing, and medical care.
D. Your spending patterns will probably not change.
E. The exact amount of money you'll need can be accurately predicted.
B. Your spending patterns will probably change.
Which one of the following expenditures for retirees is likely to increase?
A. clothing expenses
B. federal income taxes
C. medical expenses
D. workrelated expenses
E. provincial income taxes
C. medical expenses
Which one of the following expenditures for retirees is likely to increase?
A. clothing expenses
B. federal income taxes
C. provincial income taxes
D. workrelated expenses
E. leisure activity expenses
E. leisure activity expenses
Which one of the following expenditures for retirees is likely to decrease?
A. food and medical care
B. clothing expenses
C. expenses for leisure activities
D. medical expenses
E. insurance
B. clothing expenses
Which one of the following expenditures for retirees is likely to decrease?
A. food and medical care
B. expenses for leisure activities
C. work related expenses
D. medical expenses
E. insurance
C. work related expenses
A CMHC program that helps homeowners pay for minor modifications, such as adding
handrails and grab bars is called __________________
A. Canada Pension Plan
B. Home Adaptations for Seniors' Independence Program
C. Old Age Security
D. Emergency Repair Program
E. Residential Rehabilitation Assistance Program
C. Old Age Security
A CMHC program that helps lowincome homeowners in rural or remote areas make
emergency repairs to keep their homes safe is called __________________
A. Canada Pension Plan
B. Home Adaptations for Seniors' Independence Program
C. Old Age Security
D. Emergency Repair Program
E. Residential Rehabilitation Assistance Program
D. Emergency Repair Program
A CMHC program that helps lowincome homeowners, or landlords who own units occupied
by lowincome tenants, pay for repairs to bring their properties up to minimum health and
safety standards and helps owners modify their homes to make them accessible to those who
are disabled is called __________________
A. Canada Pension Plan
B. Home Adaptations for Seniors' Independence Program
C. Old Age Security
D. Emergency Repair Program
E. Residential Rehabilitation Assistance Program
E. Residential Rehabilitation Assistance Program
A housing alternative for seniors that provides independent living residences for retirees or
semiretirees in a community of healthy seniors is called __________________
A. life lease housing
B. the Home Adaptations for Seniors' Independence Program
C. a retirement home
D. an adult lifestyle/retirement community
E. the Residential Rehabilitation Assistance Program
D. an adult lifestyle/retirement community
A housing alternative for seniors in which a tenant is given the right to live in a dwelling unit in
return for an upfront payment and monthly maintenance fees is called __________________
A. a retirement home
B. the Home Adaptations for Seniors' Independence Program
C. life lease housing
D. an adult lifestyle/retirement communities
E. the Residential Rehabilitation Assistance Program
C. life lease housing
A housing alternative run by private businesses that provide seniors various combinations of
accommodation, support services, and personal care is called __________________
A. a retirement home
B. the Home Adaptations for Seniors' Independence Program
C. life lease housing
D. an adult lifestyle/retirement communities
E. the Residential Rehabilitation Assistance Program
A. a retirement home
Which of these statements is correct about the Canada Pension Plan (CPP)?
A. The CPP dates back to 1996.
B. CPP contribution is based on your age.
C. You can begin receiving your CPP benefits at the age of 50.
D. The federal government matches the CPP contributions of selfemployed individuals.
E. You can begin receiving your CPP benefits at the age of 60.
E. You can begin receiving your CPP benefits at the age of 60.
Which of these statements is correct about the Canada Pension Plan (CPP)?
A. The CPP dates back to 1996.
B. CPP contribution is based on your age.
C. CPP benefits decrease by 0.5 percent for each month earlier than the month of your 65th birthday should you start your benefits before age 65.
D. The federal government matches the CPP contributions of selfemployed individuals.
E. You can begin receiving your CPP benefits at the age of 59.
C. CPP benefits decrease by 0.5 percent for each month earlier than the month of your 65th birthday should you start your benefits before age 65.
hich of these statements is correct about the Canada Pension Plan (CPP)?
A. You must start receiving CPP at age 65.
B. CPP contribution is based on your age.
C. You can begin receiving your CPP benefits at the age of 59.
D. The federal government matches the CPP contributions of selfemployed individuals.
E. CPP benefits increase by 0.5 percent for each month later than the month of your 65th birthday should
you start your benefits later.
E. CPP benefits increase by 0.5 percent for each month later than the month of your 65th birthday should
you start your benefits later.
The ground rules for retirement planning are fast changing.

True
False
True
Your retirement will last only about 15 years.

True
False
False
During your retirement, your employer's health insurance plan and provincial health insurance
will cover your medical expenses.

True
False
False
Saving just a little bit today for your retirement won't help.

True
False
False
It is vital to engage in basic retirement planning activities through your working years.

True
False
True
Some experts suggest starting estate planning while you are still in school.

True
False
True
Be certain you don't let your 45th birthday roll by without a comprehensive retirement plan.

True
False
True
At age 65, the life expectancy of a man is 7 years.

True
False
False
Only saving now and curtailing current spending can ensure comfortable retirement later.

True
False
True
You can expect to spend about 16 to 20 years in retirement.

True
False
True
At age 65, the life expectancy of a man is 14 years.

True
False
False
At age 65, the life expectancy of a woman is 13 years.

True
False
False
Your first step in retirement planning is to analyze your current assets and liabilities.

True
False
True
Your net worth is equal to your assets minus liabilities.

True
False
True
Your current assets include everything you own that has value.

True
False
True
In a reverse annuity mortgage, a lender uses your house as collateral to buy an annuity for you
from a life insurance company.

True
False
True
In reviewing your assets for retirement, you should increase premium payments by increasing
the face value of your life insurance.

True
False
False
The exact amount of money you will need in retirement can be predicted accurately.

True
False
False
The exact amount of money you will need in retirement cannot be predicted accurately.

True
False
True
Your spending patterns during retirement will probably not change.

True
False
False
Your expenses for leisure activities will probably increase during retirement.

True
False
True
The housing needs of people do not change much as they grow older.

True
False
False
Staying in their present home is the alternative preferred by most of the persons who are
approaching retirement.

True
False
True
Federal programs are the major source of public retirement pensions.

True
False
True
The Canada Pension Plan (CPP) includes disability, retirement, and survivor benefits.

True
False
True
The contribution you are required to make to the CPP is fixed.

True
False
False
You can qualify for reduced CPP retirement benefits at age 60.

True
False
True
You can qualify for reduced CPP retirement benefits at age 50.

True
False
False
In an RRSP, contributions are tax deductible and earnings accumulate tax free.

True
False
True
Annuities are meant to provide retirement income in much the same way as a salary provides
regular income.

True
False
True
Unless it is indexed, an annuity provides no protection from inflation.

True
False
True
Even if it is a life annuity, payments cannot continue until death.

True
False
False
The first step in stretching your retirement income is to make sure you are receiving all the
income to which you are entitled.

True
False
True
There are hardly any psychological benefits of working part time during your retirement.

True
False
False
An employee whose pension has not vested will lose all contributions to her pension plan if she
transfers to a new employer.

True
False
False
When I retire, I can depend on the government and my company pension to pay for my basic
living expenses.

True
False
False
When I retire, my pension benefits will increase to keep pace with inflation.

True
False
False
At age 65, the life expectancy of a man is 18 years.

True
False
True
At age 65, the life expectancy of a woman is 21 years.

True
False
True
Students also viewed