1. George, age 63, is receiving Social Security retirement benefits. He also works part time, and his earnings are $10,000 more than the earnings limit. His Social Security retirement benefits this year will be reduced by

A. $10,000

B. $5,000

C. $7,500

D. $0

2. Amanda owns a manufacturing company with 60 employees. She would like to implement a retirement plan that is easy to administer and permits both employee and employer contributions. What type of plan would you recommend?

A. DB(k) plan

B. SIMPLE IRA

C. Section 401(k) plan

D. Simplified employee pension (SEP) plan

3. James, age 45, works for an advertising company, where he earns $75,000. James would like to retire at age 65. He earns 9% on his investments, and inflation has averaged only 3% annually. Assuming he is expected to live until age 90 and he has a wage replacement ratio of 80% (in today's dollars), how much will James need to have accumulated when he retires to maintain his current lifestyle during retirement?

A. $1,100,265

B. $1,490,653

C. $1,863,311

D. $2,322,382

4. Joshua, age 45, has come to you for help in planning his retirement. He works for a manufacturing company, where he earns a salary of $75,000. Joshua would like to retire at age 65. He feels this is a realistic goal because he has consistently earned 9% on his investments and inflation has only averaged 3%. Assuming he is expected to live until age 90 and he has a wage replacement ratio of 80%, how much will Joshua need to have accumulated on the day that he retires to adequately provide for his retirement lifestyle?

A. $1,863,311

B. $1,490,649

C. $1,408,595

D. $1,160,240

5. Austin, age 45, has come to you for help in planning his retirement. He works for a manufacturing company, where he earns a salary of $75,000. Austin would like to retire at age 65. He feels this is a realistic goal because he has consistently earned 9% on his investments and inflation has averaged 3%. If Austin expects to live until age 90 and he has a wage replacement ratio of 80%, assuming a capital preservation approach, how much will Austin need to have accumulated on the day that he retires to adequately provide for his retirement lifestyle?

A. $1,663,516

B. $1,010,264

C. $1,971,034

D. $1,490,649

6. Regarding assumptions used in retirement needs analysis calculations, which of the following is (are) CORRECT?

I. All other things being equal, increasing the life expectancy of the retiree will lower the amount of capital needed on the first day of retirement to support the assumed retirement income.

II. All other things being equal, changing the assumed rate of return from 6% to 8% and the assumed inflation rate from 2% to 4%, will lower the amount of capital needed on the first day of retirement to support the assumed retirement income.

A. Neither I nor II

B. Both I and II

C. I only

D. II only

7. Larry is a sole proprietor of a business with 15 employees. He would like to implement a formal retirement plan for his business. Larry is 55 years old and is planning to retire in 10 years at age 65. His company currently has a strong cash flow, which is expected to continue. Larry's own personal savings retirement need is $85,000 per year, and he pays himself $95,000 annually. The company can afford to contribute $100,000 this year for Larry's account to any retirement plan that is implemented.

Larry will also commit to an annual contribution necessary to fund the retirement plan if needed. Based on limited information, which of the following types of qualified retirement plans would you recommend for Larry and his business?

A. Traditional defined benefit pension plan

B. Stock bonus plan

C. Profit-sharing plan

D. Money purchase pension plan