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How retirement-savvy are you?

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Buying a single company’s stock usually provides a safer return than a stock mutual fund.T. True F. False
Who provides the majority of long-term care?A. Family members B. Nursing homes C. Assisted living facilities D. Hospitals
Which of the following strategies is least likely to improve retirement security?A. Saving an additional 3% of salary in the five years prior to retirement B. Working for two years past the planned retirement date C. Deferring Social Security benefits for two years longer than originally planned
Social Security workers’ monthly benefits are increased for each year that benefits are deferred from age 62 to age___.A. 65 B. 66 C. 70 D. 75
Recent research has shown that a person planning to retire at age 65 should take the least amount of investment risk at:A. Age 50 B. Age 65 C. Age 80
Historically, which one of the following generates the highest returns over a long time period?A. Small company stock funds B. Large company stock funds C. Dividend paying stock funds D. High yield bond funds
If all of a mutual fund’s assets are invested in long-term bonds and the investment climate changes so that interest rates rise significantly, the value of the mutual fund sharesA. Increase significantly B. Decrease significantly C. Will not change at all D. May rise or fall depending upon the type of bond
In order to avoid a penalty tax, distributions from an IRA must begin for the year in which you attain age___.A. 55 B. 59 ½ C. 65 D. 70 ½
Which one of the following is false about the federal taxation of life insurance purchased by an individual?A. The life insurance death benefit is income tax free B. Earnings in the policy are tax-deferred C. You can access premiums at any time without income tax consequences D. Life insurance death benefits are not subject to estate taxes
Between a lump sum and a life annuity from a company sponsored retirement plan, the life annuity is likely to be the better choice if the participant is most concerned about:A. Leaving money to children B. Having enough money to meet basic expenses C. Having flexibility to meet changing income needs D. Getting an increasing stream of income over retirement
If a large public company sponsoring a 401(k) plan files for bankruptcy, employees are:A. At risk of losing their 401(k) benefits because trust assets will pay creditors first B. At no risk of losing their 401(k) benefits because the plan is outside the claims of creditors C. Only at risk of losing their 401(k) benefits if the plan document says the creditors have the right to trust assets D. Only at risk of losing their 401(k) benefits if a judge decides that the creditors should be paid first
Medicare typically pays for the costs of a nursing home for one year.T. True F. False
An immediate income annuity that pays income of $1,000 a month is generally going to be more expensive:A. The younger the owner is when the annuity begins B. For a man rather than for a woman C. If interest rates rise. D. For a single person than for a couple
Exchange-traded funds generally have higher expenses than actively managed mutual funds.T. True F. False
A 65-year-old man has an average life expectancy of approximately an additional:A. 10 years B. 15 years C. 20 years D. 25 years
Converting a portion of a traditional IRA into a Roth IRA is a good idea this year if:A. You have more taxable income than usual and your marginal tax rate is higher than normal B. You have a big tax deduction this year and your marginal tax rate is lower than normal C. The value of the assets in your IRA have remained the same for 10 years
If the interest rate on your savings account were 2% per year and inflation were 4% per year, after one year, you would be able to buy ___ with the money in this account:A. More than today B. Exactly the same as today C. Less than today
According to the Social Security Administration, in 2033 they will only have funds to pay for approximately ___ of promised benefits.A. 0% B. 25% C. 50% D. 75%
Traditional Medicare will cover which of the following medical expenses?A. Routine dental care B. Wellness visits C. Hearing aids D. All of the above
Which one of the following statements concerning the federal income tax treatment of distributions to a 65-year-old retiree is true?A. All distributions from a Roth IRA that has been maintained for more than five years will be tax-free B. All distributions from a traditional IRA created with tax deductible contributions will be taxed as long-term capital gains C. Distributions from a traditional IRA prior to age 70 ½ will be subject to an additional 10% penalty tax
The total out of pocket medical costs for married couples in retirement is relatively consistent from retiree to retiree.T. True F. False
Long-term care insurance is intended to cover:A. Custodial care and any post surgical care B. Custodial care and any life sustaining measures such as Ivs C. Custodial care and semi-skilled nursing care D. Only custodial care
Investing 20-40% of a retirement portfolio in a life annuity can protect against life expectancy uncertainty, ensuring a basic level of spending is available throughout retirement.T. True F. False
Which of the following types of long-term bonds typically has the highest yield?A. AAA-rated corporate bonds B. B-rated corporate bonds C. Treasury bonds
An individual who is age 75 can still make a Roth IRA contribution if he or she has earnings from work and does not exceed the earnings limit.T. True F. False
What is the proportion of the population that is going to need assistance with activities of daily living (need long-term care) at some point?A. 10% B. 25% C. 50% D. 70%
A single person who is likely to live to age 90 is generally going to be better off claiming Social Security benefits at age ___.A. 62 B. 66 C. 70 D. 75
Most experts agree that the best way to protect against inflation is to have a:A. Diversified portfolio of stocks B. Diversified portfolio of bonds C. Diversified portfolio of CDs (certificates of deposit)
The lifetime income payout rate (the annual annuity payment as a percentage of the purchase price) for an immediate income annuity for a 65-year-old male today is roughly:A. 3-4% B. 6-7% C. 10-12% D. 14-15%
Which one of the following is true about cash value life insurance?A. The cash value portion will accumulate tax deferred B. You typically cannot borrow from the cash value C. The policy will expire axer a specified period of time D. The policy will typically cost less than a term insurance policy
A PE ratio means:A. Profits to expense B. Price to earnings C. Par value to earnings D. Price to expense
Sarah is single, age 65, and takes a reverse mortgage with a lump sum payment. When does the loan have to be repaid?A. When she attains age 75 B. When she takes on any other loan C. When she permanently leaves the home D. Whenever the mortgage company wants it back
A deferred variable annuity with guaranteed lifetime withdrawal benefits:A. Ensures that the investment account will not lose value B. Only offers investment alternatives with fixed returns C. Pays guaranteed income that varies based on market performance D. Can pay income even if the investment account goes to zero
Continuing care retirement communities (CCRC’s) are different than a 55-plus housing development in that CCRCs always offer:A. A range of care from independent living to nursing care B. The opportunity to participate in social events C. The opportunity to have relatives move onto facility grounds D. A range of housing options
Who pays for the majority of long-term care expenses?A. Medicare B. Private payment by individuals C. Medicaid D. Insurance purchased by individuals
Medicare supplement insurance policies are most commonly purchased to cover the deductibles and copays that are charged under Medicare Parts A and B.T. True F. False
To maximize the withdrawal rate from a portfolio over a 30-year retirement period, it is best to hold ___ in equities throughout retirement.A. 0-10% B. 25-35% C. 50-60% D. 90-100%

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