Diversification refers to

a risk management strategy where you include a wide variety of investments within your portfolio.

the portion of your retirement invested in stocks versus bonds.

your ability to eliminate risk from your retirement planning strategies.

selecting investment options that you know the most about to increase your rate of return.

Why do people invest when risk is involved?

Because the potential to make money is greater than the risk of losing it.

Because they do not understand that investing is risky.

Because the talk about risk is really overstated; investing is a safe bet.

Because they are greedy and believe they can beat the odds to become a millionaire.

The primary difference between an annuity and a 401(k) is

annuities provide a guaranteed amount each month after retirement and income from a 401(k) is based on the earnings.

a 401(k) provides a guaranteed amount each month after retirement and annuities pay only what was earned from investments.

most annuities generate more retirement income than most 401(k)s.

annuities are insured by the federal government and 401(k)s are not.

If your company has a retirement plan,

you should sign up as soon as possible so your investment will start growing.

you can wait until you are in your 40s to start participating without any costs.

only people who plan on retiring early need to participate in the company plan.

you should wait until your bills are paid before saving money for retirement.

The best way to protect yourself from fraud risk is to

invest only with reputable companies.

ask your friends for suggestions before investing.

keep your money in a savings account at a local bank.

invest heavily in jewelry and gold.

Which of the following events will decrease your retirement funds?

Inflation increases by 10 percent, making prices more expensive now than before.

Inflation decreases to 2 percent, but your investment earnings continue drawing 10 percent.

You make regular contributions to your retirement account.

Your employer matches your contributions to your retirement account.

Which of the following statements is true?

Even though participating in company-sponsored accounts is voluntary, it is something that all employees should do.

Only people who work for employers with retirement benefits can plan for retirement.

All companies contribute to retirement accounts for their employees.

Participating in company-sponsored accounts is mandatory in all situations.

Individual Retirement Authorities

If you have a retirement account,

you can access the funds at any time, even though you pay a penalty to do so.

you cannot access the funds until you officially retire.

it is a good strategy to borrow frequently from it.

your opportunity cost for borrowing from it is very low.

Which of the following is a characteristic of a Roth IRA?

Money invested into a Roth is “after-tax” dollars.

Money is deposited into a Roth by your employer.

Money invested into a Roth is “before-tax” dollars.

Once money is deposited into a Roth IRA, it cannot be taken out until retirement.

When investing, the basic rule is this: The greater the potential to gain higher earnings, the

greater the potential for fraud

Sometimes people run low on money during retirement. Which of the following should you do first?

Rethink your retirement goals and lifestyle.

Sell your house and move into an apartment.

Find a job to increase your income.

Invest in stocks because they have a higher rate of return.

PFL # 6a Planning for Retirement

Authored by Vicki Droddy

Social Studies, Business

9th - 12th Grade

Used 260+ times

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25 questions

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MULTIPLE CHOICE QUESTION

2 mins • 1 pt

Which one of the following events could make your retirement benefit LESS than expected?

Inflation occurs at a lower rate than you calculated.

Your rate of return is lower than you had calculated.

You earn a larger retirement benefit than you had calculated.

You inherit money you had not anticipated.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

Life expectancy refers to

your perception of how long you expect to live.

an estimate of how much money you need for retirement.

a statistical estimate of the number of years you will live in retirement.

a statistical measure of the average life span of a specific population.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

When planning for retirement, you need to determine

how much money you need to live in a nursing home or retirement center.

how much money you want your children to inherit.

how much money you will need and how many years you will need it.

where you plan to live after you quit working.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

Most people plan to work

more years than they actually do.

until they are 60 years of age.

only until they qualify for their company retirement.

until they are fired or forced to retire.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

Which of the following statements about Social Security is the MOST accurate?

Even if you do not start saving and planning for retirement, you will earn enough money from Social Security to maintain your current lifestyle.

Social Security was originally designed to be a supplemental income for people over the age of 65.

Because Social Security is a government program, it is guaranteed to be there when you retire.

The average income from Social Security is about $40,000.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

If you are concerned about your investment losing money instead of appreciating, then you are worried about _____ risk?

market

inflation

fraud

financial

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

As a young person, saving for your retirement is an example of a _____ goal.

short-term

medium-term

value-added

long-term

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