Quiz for Week 4
What is the most important contributor to successful retirement planning? a.
Time: the sooner you start the better
The kind of retirement account that you use – i.e., tax free versus tax deferred c.
A company match
The professional you hire to manage your money
A retirement plan that allows you to withdraw the money that you originally put in at any time regardless of age without incurring taxes or a tax penalty is: a.
A 401k plan
A Roth IRA
A 403b plan
A deductible IRA
With a Roth IRA, at what age are you required to begin withdrawing money? a.
At age 70 ½
Never. You can die without ever having withdrawn a penny from it and pass it income tax free to our heirs c.
When you begin receiving Social Security payments
At age 59 ½
If you leave your job and you have a 401k plan with your old employer, you should: a.
Leave it where it is as long as you have under $5000 in the plan and are comfortable with the investments b.
Cash out the account and use the money to pay down credit card debt c.
Have the money sent directly to you and then put that money in an IRA rollover d.
Have the money transferred directly from your old plan custodian to a new IRA rollover custodian
What happens to the money in your retirement account if you re-marry and forget to change the beneficiary before you die? a.
It will go to your new spouse as long as you have designated him as your primary beneficiary in your will and/or trust b.
It will pass directly to your children unless you have named your new spouse in your will or trust as the primary beneficiary c.
It will go to the beneficiary named on the account, even if it is your ex-spouse d.
It will be divided equally between your new spouse and the named beneficiary 6.
What does the term “matching contribution” refer to?
The percentage of your pay that you put into a workplace retirement plan b.
A contribution an employer makes to an employee’s defined-contribution plan that is based on the employee’s own contributions to the plan c.
A contribution an employer makes to an employee’s retirement plan that is based on the length of time the employee has been with the company d.
An end-of-year bonus an employer makes to an employee’s defined-benefit plan 7.
If you don’t have enough money today to begin investing in your company’s matching 401k plan, (you have student loan and credit card debt and no emergency fund) what should you do? a.
Wait until your next raise and then begin investing the amount of your raise in your 401k while you are paying off your debt b.
Wait 5 or 10 years until you have paid off student loans and other debts and then begin saving twice as much for retirement c.
Find ways to trim your expenses to free up money that you can begin paying into your 401k now d.
Plan to work into your 80s or later
The stock market has been declining steadily. What should you do? a.
Stay the course and continue to invest in your retirement plan b.
Cease investing in your retirement plan until the market stabilizes c.
Cash out your account before you lose everything
Reduce your retirement contributions and use the extra money to build your emergency savings
Which of the following accurately defines the term “compound growth”? a.
A fee paid for the use of another person’s money
A process in which interest is added both to the principal and to any interest already earned c.
A strategy whereby an investor seeks out stocks with strong growth potential d.
Growth measured in terms of inflation
To calculate accurately the size of your future retirement nest egg, you should: a.
Assume that your money will grow at the rate that stocks have averaged over the past 40 years b.
Assume that you will not do better than the average investor, and make up for that by investing more money c.
Base your calculations on an aggressive rate of return of 6% or more d.
Base your calculations on a conservative...
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