37. The first step in retirement planning is to

a. determine how large a nest egg is required.

b. consider your longevity.

c. define your investment program.

d. determine your income-earning assets.

e. set retirement goals

____ 38. When setting retirement goals you should consider

a. what you want to do in retirement.

b. your expected standard of living.

c. your proposed level of income.

d. special retirement activities and projects.

e. all of these.

____ 39. The major mistake(s) people make in retirement planning is(are)

a. starting too early.

b. saving too little.

c. investing too aggressively.

d. a and b

e. a, b, and c

____ 40. The major mistake(s) people make in retirement planning is(are)

a. starting too late.

b. saving too little.

c. investing too conservatively.

d. a and b

e. a, b, and c

____ 41. A $3,000 annual contribution to a retirement account earning 6% will be worth ____ in 20 years.

a. $ 60,000

b. $ 96,780

c. $100,000

d. $110,340

e. $192,600

____ 42. Gordon and Lisa estimate that they will need $1,875,000 in 40 years for their retirement years. If they can earn 8 percent annually on their funds, how much do they need to save annually?

a. $7,238

b. $7,987

c. $8,103

d. $9,234

e. $9,875

____ 43. ____ do not have to be covered by Social Security coverage.

a. Farmers and ministers

b. Federal civilian employees hired before 1984 and employees of state and local governments

c. Federal employees and ministers.

d. Teachers and employees of universities.

e. Ministers and professional athletes

____ 44. Mandy and Michael Tombs are retiring soon. Their projected month Social Security benefits are $800 and $1,800, respectively. Assuming they are married and they select the best benefit alternative for them, how much will they receive monthly?

a. $ 800

b. $1,200

c. $1,800

d. $2,600

e. $2,700

____ 45. One can maximize the monthly Social Security benefit amount by delaying taking retirement benefits until age

a. 62

b. 65

c. 67

d. 70

e. 75

____ 46. Fully insured status requires 40 ____ of employment covered by social security.

a. weeks

b. months

c. quarters

d. periods

e. years

____ 47. Of the following survivors of a fully insured worker, ____ would not be eligible for social security benefits.

a. dependent children

b. spouse age 47, no children

c. spouse age 65, with dependent children

d. spouse age 65, no children

e. spouse age 26, with dependent children

____ 48. The Personal Earnings and Benefit Estimate Statement from Social Security would contain information about

a. year-by-year social security earnings credits.

b. benefits at age 62.

c. benefits at age 65 to 67.

d. benefits at age 70.

e. all of these.

____ 49. Jamie has worked for ABC Printing for 5 years. During this period ABC Printing has contributed $25,000 to her non-contributory retirement plan. Assuming ABC uses cliff vesting, the longest period allowed, how much will Jamie be able to roll into an IRA if she left ABC Printing?

a. $ 0

b. $ 5,000

c. $10,000

d. $20,000

e. $25,000

____ 50. Bill has worked for White Drywall for 4 years. During this period White Drywall has contributed $25,000 to his retirement plan. Assuming the company uses graded vesting, how much will Bill be able to roll into an IRA if he left White Drywall at the end of 3 years?

a. $ 0

b. $ 5,000

c. $10,000

d. $15,000

e. $20,000

____ 51. The amount of money in your defined contribution retirement portfolio will depend on

a. the age at which you begin contributing.

b. the amount of money you deposit each month.

c. the rate of return on your savings.

d. all of these.

e. none of these really make much difference.

____ 52. Lillian has a defined benefit plan that promises an annual retirement benefit based on the average of her last three years of salary times 2 times years of service. At retirement Lillian has 15 years of service and an average salary over the last 3 years of $65,000. What will her annual benefit be?

a. $65,000

b. $50,500

c. $35,400

d. $19,500

e. cannot determine

____ 53. Employee contributions to ____ plans do not reduce taxable income.

a. 403(b)

b. Thrift and savings

c. 457

d. 401(k)

e. a, b, and c

____ 54. If you work nine years under the social security system, you are

a. fully insured.

b. partially insured.

c. privately insured.

d. currently insured.

e. uninsured.

____ 55. Employer matching contributions are common with ____ plans.

a. 401(k)

b. 403(b)

c. 457

d. a and b

e. a and c

____ 56. Jacque Solis (age 38) is leaving her current job and would like to take a long vacation before starting new employment. She has $58,000 in a qualified plan that she would like to live on during this period. If she is in a 25 percent marginal tax bracket, how much will she have left after paying taxes and penalties?

a. $58,000

b. $43,500

c. $37,700

d. $29,000

e. $14,500

____ 57. Sally and Patrick are married with 4 young children. Patrick stays at home with the kids while Sally works as CEO of a small manufacturing firm earning $105,000 annually. Sally is covered by a 401(k) plan at work, but they would like to maximize their IRA contributions as well. Which of the following are true assuming their AGI is $105,897?

a. Sally and Patrick could each contribute $3,000 to a Roth IRA.

b. Sally and Patrick could each contribute $3,000 to a deductible traditional IRA.

c. Only Sally can contribute to any type of IRA. Patrick has no earned income.

d. Patrick could contribute $3,000 to either a deductible tradition IRA or a Roth IRA.

e. a and d

____ 58. An investment vehicle that systematically pays out benefits over an extended period of time is a(n)

a. common stock.

b. bonds.

c. mutual funds.

d. annuity.

e. money market securities.

____ 59. The two ways to buy annuities are single premium and

a. multi-premium.

b. future premium.

c. installment premium.

d. guaranteed premium.

e. lateral premium.

____ 60. You will receive the largest monthly payment under an annuity contract when the selected payment option is the

a. life annuity with no refund.

b. life annuity, period certain.

c. refund annuity.

d. annuity certain.

e. temporary life annuity.

37. The first step in retirement planning is to a. determine how large a nest egg is required. b. consider your longevity. c. define your investment program. d. determine your income-earning assets. e. set retirement goals ____ 38. When setting retirement goals you should consider a. what you want to do in retirement. b. your expected standard of living. c. your proposed level of income. d. special retirement activities and projects. e. all of these. ____ 39. The major mistake(s) people make in retirement planning is(are) a. starting too early. b. saving too little. c. investing too aggressively. d. a and b e. a, b, and c ____ 40. The major mistake(s) people make in retirement planning is(are) a. starting too late. b. saving too little. c. investing too conservatively. d. a and b e. a, b, and c ____ 41. A $3,000 annual contribution to a retirement account earning 6% will be worth ____ in 20 years. a. $ 60,000 b. $ 96,780 c. $100,000 d. $110,340 e. $192,600 ____ 42. Gordon and Lisa estimate that they will need $1,875,000 in 40 years for their retirement years. If they can earn 8 percent annually on their funds, how much do they need to save annually? a. $7,238 b. $7,987 c. $8,103 d. $9,234 e. $9,875 ____ 43. ____ do not have to be covered by Social Security coverage. a. Farmers and ministers b. Federal civilian employees hired before 1984 and employees of state and local governments c. Federal employees and ministers. d. Teachers and employees of universities. e. Ministers and professional athletes ____ 44. Mandy and Michael Tombs are retiring soon. Their projected month Social Security benefits are $800 and $1,800, respectively. Assuming they are married and they select the best benefit alternative for them, how much will they receive monthly? a. $ 800 b. $1,200 c. $1,800 d. $2,600 e. $2,700 ____ 45. One can maximize the monthly Social Security benefit amount by delaying taking retirement benefits until age a. 62 b. 65 c. 67 d. 70 e. 75 ____ 46. Fully insured status requires 40 ____ of employment covered by social security. a. weeks b. months c. quarters d. periods e. years ____ 47. Of the following survivors of a fully insured worker, ____ would not be eligible for social security benefits. a. dependent children b. spouse age 47, no children c. spouse age 65, with dependent children d. spouse age 65, no children e. spouse age 26, with dependent children ____ 48. The Personal Earnings and Benefit Estimate Statement from Social Security would contain information about a. year-by-year social security earnings credits. b. benefits at age 62. c. benefits at age 65 to 67. d. benefits at age 70. e. all of these. ____ 49. Jamie has worked for ABC Printing for 5 years. During this period ABC Printing has contributed $25,000 to her non-contributory retirement plan. Assuming ABC uses cliff vesting, the longest period allowed, how much will Jamie be able to roll into an IRA if she left ABC Printing? a. $ 0 b. $ 5,000 c. $10,000 d. $20,000 e. $25,000 ____ 50. Bill has worked for White Drywall for 4 years. During this period White Drywall has contributed $25,000 to his retirement plan. Assuming the company uses graded vesting, how much will Bill be able to roll into an IRA if he left White Drywall at the end of 3 years? a. $ 0 b. $ 5,000 c. $10,000 d. $15,000 e. $20,000 ____ 51. The amount of money in your defined contribution retirement portfolio will depend on a. the age at which you begin contributing. b. the amount of money you deposit each month. c. the rate of return on your savings. d. all of these. e. none of these really make much difference. ____ 52. Lillian has a defined benefit plan that promises an annual retirement benefit based on the average of her last three years of salary times 2 times years of service. At retirement Lillian has 15 years of service and an average salary over the last 3 years of $65,000. What will her annual benefit be? a. $65,000 b. $50,500 c. $35,400 d. $19,500 e. cannot determine ____ 53. Employee contributions to ____ plans do not reduce taxable income. a. 403(b) b. Thrift and savings c. 457 d. 401(k) e. a, b, and c ____ 54. If you work nine years under the social security system, you are a. fully insured. b. partially insured. c. privately insured. d. currently insured. e. uninsured. ____ 55. Employer matching contributions are common with ____ plans. a. 401(k) b. 403(b) c. 457 d. a and b e. a and c ____ 56. Jacque Solis (age 38) is leaving her current job and would like to take a long vacation before starting new employment. She has $58,000 in a qualified plan that she would like to live on during this period. If she is in a 25 percent marginal tax bracket, how much will she have left after paying taxes and penalties? a. $58,000 b. $43,500 c. $37,700 d. $29,000 e. $14,500 ____ 57. Sally and Patrick are married with 4 young children. Patrick stays at home with the kids while Sally works as CEO of a small manufacturing firm earning $105,000 annually. Sally is covered by a 401(k) plan at work, but they would like to maximize their IRA contributions as well. Which of the following are true assuming their AGI is $105,897? a. Sally and Patrick could each contribute $3,000 to a Roth IRA. b. Sally and Patrick could each contribute $3,000 to a deductible traditional IRA. c. Only Sally can contribute to any type of IRA. Patrick has no earned income. d. Patrick could contribute $3,000 to either a deductible tradition IRA or a Roth IRA. e. a and d ____ 58. An investment vehicle that systematically pays out benefits over an extended period of time is a(n) a. common stock. b. bonds. c. mutual funds. d. annuity. e. money market securities. ____ 59. The two ways to buy annuities are single premium and a. multi-premium. b. future premium. c. installment premium. d. guaranteed premium. e. lateral premium. ____ 60. You will receive the largest monthly payment under an annuity contract when the selected payment option is the a. life annuity with no refund. b. life annuity, period certain. c. refund annuity. d. annuity certain. e. temporary life annuity