#1
What is the recommended percentage of income to save for retirement?
15%
ExplanationCommon recommendation for retirement savings rate.
#2
Which of the following is NOT a common type of retirement account?
CD
ExplanationCertificate of Deposit (CD) is not a retirement account.
#3
What does the 'FI' in 'FIRE' stand for?
Financial Independence
ExplanationCore concept of the Financial Independence, Retire Early (FIRE) movement.
#4
Which investment strategy focuses on building a portfolio to sustain a desired lifestyle without needing additional income?
Buy and Hold
ExplanationStrategy aiming for long-term investment without frequent trading.
#5
What is the primary advantage of investing in a Roth IRA over a Traditional IRA?
Tax-free withdrawals in retirement
ExplanationTax benefits of Roth IRA withdrawals.
#6
Which factor is NOT typically considered when determining retirement needs?
Current debt
ExplanationCurrent debt is usually not a factor in retirement needs calculations.
#7
What is the primary purpose of an annuity in retirement planning?
To provide guaranteed income for life
ExplanationAnnuities offer steady income streams.
#8
What is the '4% rule' commonly used in retirement planning?
The sustainable withdrawal rate from retirement savings
ExplanationGuideline for withdrawing funds from retirement accounts.
#9
In the context of retirement planning, what does 'sequence risk' refer to?
The order in which investments are sold during retirement
ExplanationRisk of selling investments in unfavorable market conditions.
#10
What is the 'three-legged stool' model of retirement income?
Pensions, Social Security, and personal savings
ExplanationTraditional sources of retirement income.