3. Would you advise them to take the annuity offered in the defined-contribution plan, which guarantees a 3.8 percent rate of return, or would you recommend the lump-sum payment? Why? What are the disadvantages associated with your recommendation? (Select all the choices that apply.)

A. Disadvanages to a lump-sum payout include: running out of time to spend the money, not having the discipline to keep from spending the money, and it complicates the financial planning process because you are responsible for your own retirement funding.

B. One way to reduce the impact of taxes on a lump-sum distribution is to have the distribution "rolled over" into a Roth IRA.

C. In this way, they would avoid paying taxes on the distribution while the funds continue to grow on a tax-deferred basis.

D. The other way, should Timur desire to continue working, is to have him transfer his 401(k) balance to a qualified plan with his new employer.

E. Disadvanages to a lump-sum payout include: running out of time to spend the money, having the discipline to keep from spending the money, and it complicates the financial planning process because you are responsible for your own retirement funding.

F. One way to reduce the impact of taxes on a lump-sum distribution is to have the distribution "rolled over" into an IRA.

G. Disadvanages to a lump-sum payout include: possibly running out of money, not having the discipline to keep from spending the money, and it complicates the financial planning process because you are responsible for your own retirement funding.

4. What recommendations would you make to Timur and Marguerite to help them monitor expenses and safeguard their retirement lifestyle? Timur and Marguerite should consider the following strategies to help them monitor expenses and safeguard their retirement lifestyle:(Select all the choices that apply.)

1. Adjust their investments, particularly in the 401(k) plan, to cover inflation and allow their money to grow conservatively. Fixed income investments, like CDs and bonds, may be safe, but with a long time horizon during retirement, they must still beat inflation and have moderate growth to insure adequate funds for the future.

2. Monitor their investments and the overall health of their former employer. Insurance or other benefits, as well as the price of any company stock they own, could be affected by changes in the company. Changes in company benefits or their investment values could impact their retirement goals and require them to make adjustments.

3. Keep their insurance coverage up to date and the premiums paid. Don't risk an uninsured loss.

4. Use computer programs or Internet sites to spot the best investment opportunities and try to invest in them as soon as possible.