Retirement Investment and Financial Planning Quiz

Government bonds are generally considered safe due to their low risk of default.

Roth IRAs offer tax-free withdrawals in retirement, whereas Traditional IRAs offer tax-deferred growth.

While 401(k) accounts can be a source of retirement income through withdrawals, taking out a loan against a 401(k) is generally not considered a source of retirement income.

Starting to save for retirement early allows for more time for investments to grow through compounding, potentially resulting in a larger retirement nest egg.

Dollar-cost averaging involves investing a fixed amount of money at regular intervals, which can help smooth out market fluctuations over time.

401(k) accounts offer tax benefits and help individuals save for retirement through automatic payroll deductions.

Fashion trends do not affect the financial security of retirement and should not be a consideration in planning.

The Rule of 72 provides a quick estimate of the time it takes for an investment to double based on its interest rate.

Diversification is key in retirement planning; putting all savings into one high-risk investment increases the potential for significant losses.

Social Security is a government program designed to provide income support to retired individuals.

SEP-IRA plans typically allow for higher contribution limits compared to other retirement plans.

Sequence of returns risk refers to the potential impact of market downturns on a retiree's portfolio early in retirement, which can significantly reduce the portfolio's value.