Retirement Planning

Standard 6 Assessment
Directions: Circle the letter of the choice that BEST completes each
statement.
1. Which of the following events could make your retirement benefits
LESS than expected?
a. Inflation occurs at a lower rate than you calculated.
b. Your rate of return is lower than you had calculated
c. You earn a larger retirement benefit than you had calculated
d. You inherit money you had not anticipated.
2. Life expectancy refers to
a. Your perception of how long you expect to live
b. An estimate of how much money you need for retirement
c. A statistical estimate of the number of years you will live in
retirement
d. A statistical measure of the average life span of a specific
population
3. When planning for retirement, you need to determine
a. how much money you need to live in a nursing home or retirement
center
b. how much money you want your children to inherit
c. how much money you will need and how many years you will need
it
d. where you plan to live after you quit working
4. Most people plan to work
a. more than they actually do
b. until they are 60 years of age
c. only until they qualify for their company retirement
d. until they are fired or forced to retire
5. Which of the following statements about Social Security is MOST
accurate?
a. even if you do not start saving and planning for retirement, you will
earn enough money from Social Security to maintain your current
lifestyle
b. Social Security was originally designed to be a supplemental
income for people over the age of 65.
c. Because Social Security is a government program, it is guaranteed
to be there when you retire
d. The average income from Social Security is about $40,000
6. If you are concerned about your investment losing money instead of
appreciating, then you are worried about ___________ risk.
a. market
b. inflation
c. fraud
d. financial

7. As a young person, saving for your retirement is an example of a

____________ goal.
a. short-term
b. medium-term
c. value-added
d. long-term
8. Diversification refers to
a. the portion of your retirement investment in stocks versus bonds
b. your ability to eliminate risk from your retirement planning
strategies
c. a risk management strategy where you include a wide variety of
investments within your portfolio
d. selecting investment options that you know the most about to
increase your rate of return.
9. Why do people invest when risk is involved?
a. Because they do not understand that investing is risky.
b. Because the talk about risk is really overstated; investing is a safe
bet.
c. Because the potential to make money is greater than the risk of
losing it.
d. Because they are greedy and believe they can beat the odds to
become a millionaire.
10.
The Primary difference between an annuity and a 401(k) is
a. Annuities provide a guaranteed amount of each month after
retirement and income from a 401(k) is based on the earnings.
b. a 401(k) provides a guaranteed amount each month after
retirement and annuities pay only what was earned from
investments.
c. Most annuities generate more retirement income than most
401(k)s.
d. Annuities are insured by the federal government and 401(k)s are
not.
11.
If your company has a retirement plan
a. You can wait until you are in your 40s to start participating without
any costs.
b. You should sign up as soon as possible so your investment will start
growing.
c. Only people who plan on retiring early need to participate in the
company plan.
d. You should wait until your bills are paid before saving money for
retirement.
12.
The potential risk that you will lose our money due to a
company going bankrupt is called ________________ risk.
a. market
b. fraud
c. corporate

d. financial
13.
The Best way to protect yourself from fraud risk it to
a. Invest only with reputable companies.
b. Ask your friends for suggestions before investing.
c. Keep your money in a savings account at a local bank.
d. Invest heavily in jewelry and gold.
14.
Which of the following events will decrease your retirement
funds?
a. Inflation decreases to 2 percent, but your investment earnings
continue drawing 10 percent.
b. Inflation increases by 10 percent, making prices more expensive
now than before.
c. You make regular contributions to your retirement account.
d. Your employer matches your contributions to your retirement
account.
15.
Which of the following statements is TRUE?
a. Only people who work for employers with retirement benefits can
plan for retirement.
b. All companies contribute to retirement accounts for their
employees.
c. Participating in company-sponsored accounts is mandatory in all
situations.
d. Even though participating in company-sponsored accounts is
voluntary, it is something that all employees should do.
16.
IRAs are
a. Individual Retirement Accounts.
b. Integrated Retirement Accounts
c. Inflation Resistant Accounts
d. Individual Retirement Authorities
17.
The HIGHEST percentage of income for people over age 65
comes from
a. Employment benefits.
b. Retirement accounts.
c. Social security
d. Other assets
18.
Most IRAs are invested in
a. Stocks
b. Bonds
c. Gold and silver
d. Mutual funds
19.
If you have an IRA, you are required to start drawing income
from it at age
a. 50
b. 55
c. 59
d. 62

20.
If you have a retirement account,
a. You can access the funds at any time, even though you pay a
penalty to do so.
b. You cannot access the funds until you officially retire
c. It is a good strategy to borrow frequently from it
d. Your opportunity cost for borrowing from it is very low.
21.
The risk that you have been tricked or deceived when marking
an investment is called
a. Market price risk
b. Financial risk
c. Fraud risk
d. Inflation risk
22.
Which of the following is a characteristic of a Roth IRA?
a. Money invested into a Roth is after-tax dollars.
b. Money is deposited into a Roth by your employer
c. Money invested into a Roth is before-tax dollars.
d. Once money is deposited into a Roth IRA, it cannot be taken out
until retirement.
23.
When investing, the basic rule is this: the GREATER the
potential to gain higher earnings, the
a. Higher the level or risk
b. Lower the level or risk
c. Greater the potential for fraud
d. Less likely you are to invest
24.
A company sponsored plan where you determine how to invest
your money is called a (n)
a. Annuity
b. IRA
c. Pension plan
d. 401(k) plan
25.
Sometimes people run low on money during retirement. Which
of the following should you do first?
a. Sell your house and move into an apartment
b. Rethink your retirement goals and lifestyle
c. Find a job to increase your income
d. Invest in stocks because they have a higher rate of return