1-Christian wants to retire in 15 years when he turns 65.

Christian wants to have enough money to replace 75% of his current income less what he expects to receive from Social Security at the beginning of each year. He expects to receive

$18,000 per year from Social Security in today's dollars.

Christian is aggressive and wants to assume an 8% annual investment rate of return and that inflation will be 3% per year. Based on his family history, Christian expects that he will live to be 95 years old. If Christian currently earns

$80,000 per year and he expects his raises to equal the inflation rate, how much does he need at retirement to fulfill his retirement goals?

(a) $1,022,807.

(b) $1,072,458.

(c) $1,559,131.

(d) $1,583,152.

------------------

2. A company's defined benefit pension plan utilizes a funding formula that considers years of service and average compensation to determine the pension benefit payable to the plan participants. If Kim is a participant in this defined benefit pension plan and she has 30 years of service with the company and average compensation of $75,000, what is the maximum pension benefit that can be payable to Kim at her retirement?

(a) $15,500.

(b) $46,000.

(c) $75,000.

(d) $185,000.

-------------------------------

3. Which of the following employees is a key employee for 2013?

1. Matt, an officer of the company, who earns $100,000 per year and owns 2% of the company.

2. Missy, who earns $37,000 per year and owns 5% of the

company.

3. Tara, an officer of the company who earns $175,000.

4. Julie, a 10% owner of the company who earns $24,000 per

year as a secretary.

(A) 4 only.

(B) 3 and 4

(C) 2 and 3

(D) 1, 3, and 4.

--------------------------

4. Which of the following factors may affect a retirement plan?

5. Career earnings.

6. Retirement life expectancy.

7. Mortality.

8. Savings rate.

(a) 1 and 2.

(b) 2 and 3.

(c) 1, 3, and 4.

(d) All of the above.

-------------------------------------------------

5. John has been employed by Phone Services, Inc. for 13 years, and currently earns $450,000 per year. John saves $40,000 per year. He plans to pay off his horne at retirement and live debt free. He currently spends $80,000 per year on his mortgage. What do you expect John's wage replacement ratio to be based on the above information?

(a) 65.68%.

(b) 70.41%.

(c) 73.33%.

(d) 91.11%.

-------------------------------------------------------

6. Which of the following statements are reasons to delay eligibility of employees to participate in a retirement plan?

1. Employees don't start earning benefits until they become plan participants (except in defined benefit plans, which may count prior service).

2. Since turnover is generally highest for employees in their first few years of employment and for younger employees, it makes sense from an administrative standpoint to delay their eligibility.

(a) 1 only.

(b) 2 only.

(c) Both 1 and 2. (d) Neither 1 nor 2.

Thanks.