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How to estimate your retirement income
Contributed by: Roe
  • 1. What is the first step in estimating your retirement income?
A) Estimate your investment returns.
B) Calculate your Social Security benefits.
C) Liquidate all assets.
D) Determine your desired retirement lifestyle.
  • 2. Which of the following is NOT a common source of retirement income?
A) Lottery winnings.
B) Investments.
C) Social Security.
D) Pensions.
  • 3. How does inflation affect retirement income planning?
A) It reduces the purchasing power of savings.
B) It increases the value of fixed-income investments.
C) It only affects luxury goods.
D) It is irrelevant to retirement planning.
  • 4. What is a safe withdrawal rate often cited by financial advisors?
A) 10%
B) 2%
C) 15%
D) 4%
  • 5. What is Social Security's full retirement age for those born in 1960 or later?
A) 67
B) 68
C) 66
D) 65
  • 6. When is the best time to start saving for retirement?
A) When you have no other debts.
B) 5 years before retirement.
C) 10 years before retirement.
D) As early as possible.
  • 7. What is a Roth IRA?
A) A retirement account that requires you to pay taxes both when contributing and withdrawing.
B) A retirement account that guarantees a fixed rate of return.
C) A retirement account only for government employees.
D) An individual retirement account that allows for tax-free withdrawals in retirement.
  • 8. What is a 401(k)?
A) A retirement savings plan offered by employers.
B) A government-sponsored healthcare program.
C) A type of bond.
D) A fixed annuity.
  • 9. What is diversification?
A) Investing all your money in a single stock.
B) Spreading investments across different asset classes.
C) Focusing solely on high-growth stocks.
D) Avoiding all risk in your portfolio.
  • 10. How can healthcare costs impact your retirement income?
A) They are usually fully covered by Medicare.
B) They can significantly reduce available funds.
C) They are negligible in retirement.
D) They only affect people with pre-existing conditions.
  • 11. What is the 'sequence of returns risk'?
A) The risk of your retirement savings running out before you die.
B) The risk of being forced to work longer than planned.
C) The risk of not saving enough for retirement.
D) The risk of experiencing poor investment returns early in retirement.
  • 12. Which type of investment generally has the highest potential for growth?
A) Certificates of Deposit (CDs).
B) Savings accounts.
C) Stocks.
D) Bonds.
  • 13. What is a pension?
A) A lump-sum payment made at retirement.
B) A government program that provides income to low-income individuals.
C) A type of insurance policy.
D) A retirement plan sponsored by an employer that provides a guaranteed income stream.
  • 14. How does delaying Social Security affect your benefits?
A) It has no effect on your benefits.
B) It decreases your monthly benefit amount.
C) It only affects spousal benefits.
D) It increases your monthly benefit amount.
  • 15. What is an annuity?
A) A type of stock.
B) A contract with an insurance company that provides a guaranteed income stream.
C) A government bond.
D) A certificate of deposit.
  • 16. Which of the following is NOT a key factor in estimating retirement needs?
A) Inflation rate.
B) Life expectancy.
C) Desired lifestyle.
D) The current price of gasoline.
  • 17. What is a tax-advantaged retirement account?
A) A high-risk investment account.
B) An account that offers tax benefits, such as tax-deferred growth or tax-free withdrawals.
C) A savings account with a guaranteed high interest rate.
D) An account that is exempt from all taxes.
  • 18. What is the purpose of asset allocation?
A) To avoid paying taxes on investments.
B) To generate passive income.
C) To balance risk and return in your portfolio.
D) To guarantee a specific rate of return.
  • 19. What is the difference between a Traditional IRA and a Roth IRA?
A) There is no difference between them.
B) Traditional IRAs are only for self-employed individuals.
C) Traditional IRA contributions are tax-deductible, while Roth IRA withdrawals are tax-free.
D) Roth IRAs have higher contribution limits.
  • 20. How can working part-time in retirement affect your income?
A) It always negatively impacts your Social Security benefits.
B) It only affects individuals with very high incomes.
C) It can supplement your retirement savings.
D) It has no impact on your overall financial situation.
  • 21. What is generally considered a conservative investment?
A) Stocks.
B) Cryptocurrency.
C) Real estate.
D) Bonds.
  • 22. What is estate planning?
A) Planning your retirement vacation.
B) Planning for the distribution of your assets after your death.
C) Planning for your income taxes during retirement.
D) Planning for your healthcare needs during retirement.
  • 23. How can downsizing your home impact your retirement?
A) It has no impact on your retirement finances.
B) It only affects your property taxes.
C) It can free up equity for retirement savings.
D) It always results in a significant financial loss.
  • 24. What does 'cost of living' refer to?
A) The expenses required to maintain a certain standard of living.
B) The average salary in a particular region.
C) The total value of all assets owned by an individual.
D) The amount of money needed to purchase a house.
  • 25. What is Medicare?
A) A social security program.
B) A life insurance policy.
C) A retirement savings plan.
D) A federal health insurance program for people 65 or older.
  • 26. What is long-term care insurance?
A) Health insurance for emergencies only.
B) Insurance that covers home repairs.
C) Life insurance for children.
D) Insurance that helps cover the costs of long-term care services.
  • 27. What is the rule of 72?
A) A rule for calculating Social Security benefits.
B) A rule for determining the optimal asset allocation.
C) A way to estimate how long it takes for an investment to double.
D) A rule for estimating inflation.
  • 28. Why is it important to review your retirement plan regularly?
A) Only if you change jobs.
B) To adjust for changes in your circumstances and the market.
C) Once it's created, it never needs to be changed.
D) Only if the stock market crashes.
  • 29. What is a Required Minimum Distribution (RMD)?
A) The minimum amount you should save for retirement each year.
B) The maximum amount you can contribute to a retirement account.
C) The amount you must withdraw annually from certain retirement accounts after age 73 (subject to change).
D) A tax penalty for withdrawing money early from a retirement account.
  • 30. What is a brokerage account?
A) A checking account.
B) A savings account.
C) An account held at a financial institution where you can buy and sell investments.
D) A retirement account with special tax advantages.
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