Chapter 11 Quiz
If your living expenses are around $25,000 a year and you'd like to retain that amount of purchasing power in the future, assuming you're 30 years from retirement and inflation is 3.25%, how much will you be spending when you retire?
$65,269
Up to ______ of your Social Security benefits may be taxable....
85%
To qualify for Social Security benefits, how long must you work and contribute to the program?
10 years
If life expectancy continues to increase at current rates, in 30 years, your life expectancy at age 65 could be...
28-30 years
How old must you be to receive full benefits from Social Security?
67
The amount of a payout for a defined contribution plan is determined by your wages and length of service with the company
False
Which government body covers insurance of employees' pension obligations?
PBGC
What was FDR talking about establishing in this quote? "<em>We can never insure one hundred percent of the population against one hundred percent of the hazards and vicissitudes of life. But we have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age...It is, in short, a law that will take care of human needs and at the same time provide for the United States an economic structure of vastly greater soundness."
Social Security
If an employee has become "vested", what does that mean?
They have worked at a company long enough to get a payout at retirement age
Match the terms below to their correct definitions.
Traditional IRA: an account funded by tax-deductible contributions which are taxed later as the funds are withdrawn Roth IRA: an account whose deposits have been taxed, and withdrawals will not be taxed in the future Simplified employee pension: allows an employer with few or no employees to contribute deductible retirement contributions Savings income match for employees: employees make salary reduction contributions that the employer matches Keogh Plan: retirement plan for small or self-employers, has defined contributions that are deductible
Having an employer fund your retirement is an advantage, but having a fixed income in retirement is a drawback during periods of inflation
True
One way to avoid probate and estate taxes is to give gifts to your beneficiaries while you are still alive.
True
The value of your retirement account will grow through your contributions and through its own earnings.
True
While estate taxes tax your assets in your estate, inheritance taxes tax your assets when they are given to your beneficiaries.
True
Match the term below to the correct definition:
trust: a legal entity who owns assets managed by a trustee for the benefit of a beneficiary testamentary trust: established so that beneficiaries have assets managed for them when they are unable to living trust: established while the grantor is alive, does not become public record at your death revocable living trust: can be taken back by the grantor at any time irrevocable living trust: cannot be changed - the grantor gives up possession of their assets
