Lessons & Quizzes

Can You Pass This Retirement Planning Quiz?
This quiz was designed to gauge the level of understanding you have when it comes to Retirement Planning.

Most financial experts agree that the best way to protect against inflation is to have a:*
- Diversified portfolio of stocks
- Diversified portfolio of bonds
- Diversified portfolio of CDs (certificates of deposit)

Converting a portion of a traditional IRA into a Roth IRA is a good idea this year if:*
- You have a big tax deduction this year and your marginal tax rate is lower than normal.
- You have more taxable income than usual and your marginal tax rate is higher than normal.
- The value of the assets in your IRA has remained the same for 10 years.

In order to avoid a penalty tax, distributions from an IRA must begin the year in which you attain the age of:*
- 55
- 59½
- 65
- 70½

Which one of the following statements is true concerning the federal income tax treatment of distributions to a 65-year-old retiree?*
- All distributions from a Roth IRA that has been maintained for more than five years will be tax-free.
- Distributions from a traditional IRA prior to age 70½ will be subject to an additional 10 percent penalty tax.
- All distributions from a traditional IRA created with tax deductible contributions will be taxed as long-term capital gains.

Which of the following types of long-term bonds typically has the highest yield?*
- AAA-rated corporate bonds
- B-rated corporate bonds
- Treasury bonds

Please choose the response below that best completes this statement. If you have a well-diversified portfolio of 50 percent stocks and 50 percent bonds that is worth $100,000 at retirement, based on historical returns in the United States, the most you can afford to withdraw is ____ plus inflation each year in order to have a 95 percent chance that your assets will last for 30 years.*
- $2,000
- $4,000
- $6,000
- $8,000

The total out-of-pocket medical costs for married couples in retirement are relatively consistent from retiree to retiree.*
- True
- False

Buying a single company’s stock usually provides a safer return than a stock mutual fund.*
- True
- False

If 100 percent of a mutual fund’s assets are invested in long-term bonds and the investment climate changes so that interest rates rise significantly, then the value of the mutual fund shares:*
- Decreases significantly
- May rise or fall depending upon the type of bond
- Increases significantly
- Will not change at all

A single person who is likely to live to age 90 is generally going to be better off claiming Social Security benefits at:*
- 62
- 66
- 70
- 75

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