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Exam 10: Savings for Distant Goals: Retirement and Education Funding

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Question 41

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Which future change in the Social Security system is most likely as part of Social Security reform?

A) Raising the retirement age
B) Increasing benefits for the wealthy
C) Eliminating the program
D) Lowering taxes on the wealthy

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Question 42

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Which is not one of the steps in estimating how much you need to save to achieve your retirement goals?

A) Estimating expected inheritance
B) Estimating expected income from employer defined-benefit pension plan(s)
C) Using time value of money calculations to estimate the total retirement wealth you'll need to have saved by the time you retire to cover your income shortfall
D) Estimating the present value of any current retirement savings you have accumulated

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Question 43

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Social Security is a(n) ________ system.

John was born in 1985; what is his normal retirement age?

To be "fully insured" under the Social Security program,

Social Security benefits are based on the ________, which is the top 35 years of earnings (up to the taxable maximum for each year) , adjusted for wage inflation to current-year dollars.

If Jack Miller were to underestimate the effects of inflation on his retirement income, his standard of living in retirement could consistently__________ as he gets older.

The American opportunity tax credit is a tax credit up to a maximum of

Which of the following is not one the causes of the projected insolvency of Social Security?

Which of these government college savings programs do not tax investment earnings or qualified withdrawals?

Carla and Ben have been married for 50 years. During that time, Carla stayed home raising their children and maintaining their household while Ben worked for an engineering firm. When they reach retirement age, together Ben and Carla are eligible to receive

John and Mary have a four-year-old son. Annual public college tuition is $12,000 today. If costs increase at 4% per year, how much will college tuition be when John and Mary's son enters college in 14 years?

Which accounts allow pretax contributions of $2,000 per year and tax-free withdrawals for qualified education expenses?

Benjamin earns $150,000 per year and has decided to contribute money to his grandson's education. Which program should he contribute to?

Which of the following types of investments do not require you to pay taxes on investment earnings until withdrawal?

Carlos has estimated that he will need about $145,650 in the first year of retirement (adjusted for inflation) , but his wife is worried about being taxed on this income. Assuming they will pay 28% average tax rate, how much do they need to generate in pretax income for their first year's expenses?

When comparing the Section 529 prepaid tuition plan and the Section 529 savings plan, the Section 529 savings plan is most similar to

The replacement ratio method is considered ________ method than the adjusted expense method, when estimating retirement income needs.

Bill wishes to take a deduction for a $6,000 contribution to his traditional IRA. When is the deadline to fund his traditional IRA in order to take the income tax deduction for 2019?

The younger you retire, the __________ your retirement period and the __________ time you have to accumulate wealth.