#1
What is the recommended percentage of income to save for retirement?
15%
ExplanationSave 15% of income for retirement.
#2
Which of the following is a tax-advantaged retirement account in the United States?
All of the above
ExplanationAll options are tax-advantaged retirement accounts.
#3
What is a '401(k) match'?
An employer contribution matching the employee's contribution to a 401(k) plan
ExplanationA 401(k) match is when an employer matches employee contributions.
#4
What is the purpose of a '529 plan' in financial planning?
To save for college expenses
Explanation529 plans are for saving for college expenses.
#5
What is the 'rule of thumb' for retirement savings needed to maintain pre-retirement lifestyle?
15 times your annual income
ExplanationSave 15 times your annual income for retirement.
#6
Which of the following is a strategy to catch up on retirement savings if you're behind?
All of the above
ExplanationAll options are strategies to catch up on retirement savings.
#7
What is the '4% rule' in retirement planning?
A rule stating you can safely withdraw 4% of your retirement savings each year
ExplanationThe 4% rule allows for a safe withdrawal rate from retirement savings.
#8
What is the main advantage of a Roth IRA over a traditional IRA?
Tax-free withdrawals in retirement
ExplanationRoth IRA withdrawals are tax-free in retirement.
#9
What is the role of Social Security in retirement planning?
To provide supplemental income in retirement
ExplanationSocial Security provides additional income in retirement.
#10
What is an annuity in the context of retirement planning?
A guaranteed stream of income
ExplanationAn annuity provides a guaranteed income stream.
#11
What is a 'required minimum distribution' (RMD) in retirement accounts?
The minimum amount you must withdraw from your retirement account each year after reaching a certain age
ExplanationRMD is the minimum withdrawal required from retirement accounts at a certain age.
#12
What is the 'sequence of returns risk' in retirement planning?
The risk of receiving lower returns early in retirement when withdrawals are made
ExplanationSequence of returns risk is the risk of lower returns early in retirement.
#13
What is a 'longevity risk' in retirement planning?
The risk of outliving your retirement savings
ExplanationLongevity risk is the risk of outliving savings.
#14
What is the purpose of a 'backdoor Roth IRA'?
To make contributions to a Roth IRA for high-income earners
ExplanationA backdoor Roth IRA allows high-income earners to contribute to a Roth IRA.