Book 1 Flashcards
1
Q
Positive aspects of the EARLY SINGLE LIFE client
A
- highly mobile in terms of housing and employment
- income high as compared to previous stage as a student
- good health status
- possible low credit burden
2
Q
Challenges for the EARLY SINGLE LIFE
A
- unclear values related to finances
- possess few assets
- income probably at lowest point but rising
- high student loan debt
- little experience in budgeting and financial planning
- lack of understanding of credit, wise buying techniques, and insurance
- desire to had what others have as a sign of “making it”
3
Q
Financial tasks for EARLY SINGLE LIFE
A
- est good credit history
- set financial goals
- purchase first major use assets incl cars, basic furniture, electronics
- est a budget and record keeping system
- est a savings habit for emergencies
- purchase car insurance, renters, health and disability insurance
- continue education as needed for career advancement
- start retirement plan and investment accounts
4
Q
MATURE SINGLE LIFE
A
Begins in the 5th-7th year of one’s career and can last until retirement; rarely viewed as transitional to another stage other than retirement
5
Q
Positive aspects to the MATURE SINGLE LIFE
A
- career has been established
- income high or adequate, stable or growing
- housing has been solidified whether renting or purchased
- significant use assets have been established
- financial values and goals are set
- credit rating is established
6
Q
Challenges for MATURE SINGLE LIFE
A
- lack of another to rely on financially in an emergency
- possible purchase of housing
- focus on long term goals such as investment or retirement program
- possible increased responsibility for aging parents
- career responsibilities and desires overshadow personal development
7
Q
Important financial tasks for MATURE SINGLE LIFE
A
- effectively handle increasing income
- develop a more complex budget
- expand savings and investment program focusing on growth
- add sophistication to financial and retirement planning
- write a will, letter of last instructions and advanced directives
- buy appropriate insurance coverage, esp disability protection
- plan income tax strategies to avoid overpayment
- build an emergency cash reserve
- maintain credit standings
- continuously assess progress toward financial objectives
8
Q
SINGLE-PARENTHOOD, INITIAL PHASE
A
Encompasses the first year or two of single parenthood after birth of a child, divorce, or widowhood; may or may not have been planned but is usually viewed as transitional to better times as a single parent or with a partner
9
Q
Positive aspects of SINGLE-PARENTHOOD, INITIAL PHASE
A
- freedom to set one’s own financial goals and objectives
- possible assistance from friends and relatives
- possible access to governmental programs
10
Q
Challenges for the SINGLE-PARENTHOOD, INITIAL PHASE
A
- income may have dropped significantly from previous phase
- solely responsible for meeting expenses
- previous goals may no longer be achievable with new goals to be established
- high child care expenses
- balancing work and family responsibilities
- where a partner had been present, adaptation to the loss of their contributions to income and household work
- avoid o druse of credit to ease the transition
- frustration with reversed or slowed financial progress
11
Q
Important financial tasks for SINGLE-PARENTHOOD, INITIAL PHASE
A
- revise net worth statement and financial goals
- check credit history
- consider opportunity to return to school or change or enhance career
- re-evaluate insurance program especially for life and disability insurance
- carefully monitor budget to match expenses to income
- rewrite will, letter of last instructions, advanced directives
- select appropriate and affordable child care costs
- focus on short-term goals is high but long term goals cannot be ignored
12
Q
SINGLE PARENTHOOD, MATURE PHASE
A
Most single parents marry or remarry within the first few years or not at all
13
Q
Positive aspects of SINGLE PARENTHOOD, MATURE PHASE
A
- has weathered the transition to single parent status and established oneself independently
- use assets in placed although may be somewhat insufficient
- employment status may offer access to fringe benefit packages for healthcare and retirement planning
- monetary and investment assets established independently
- housing arrangements solidified
- reduced need for child care
14
Q
Challenges for SINGLE PARENTHOOD, MATURE PHASE
A
- adequacy of income for day to day living may still be a problem
- possible inconsistencies in child support payments make budgeting problematic
- difficulty in funding an emergency savings plan
- may experience continued difficulty in maintaining a health care plan
- retirement plan continues to be delayed or under funded
- time mgmt is a struggle as children develop more complicated an costly social and after school activities
- funding needed for children’s education looms large
15
Q
Important financial tasks for SINGLE PARENTHOOD, MATURE PHASE
A
- make realistic projections for children’s education and for own retirement; take action to implement needed changes in funding of the plans
- solidify housing arrangements through purchase of housing or longer term lease arrangements
- explore car insurance options as children begin to drive on their own
- make decisions about children’s part time work and their contributions to the household support
- pay off debts that may have accumulated from early years of single parenthood
- update will and guardianship designation for children
- review continued need for life insurance on the life of children’s other parent
- prepare financially for the empty nest phase and the loss of child support payments and possibly alimony payments
16
Q
SINGLE PARENTHOOD, ABOUT TO MARRY OR REMARRY
A
While not a lifecycle phase, it is important transition with its own financial implications
17
Q
Positive attributes of the SINGLE PARENTHOOD, ABOUT TO MARRY OR REMARRY
A
- impending increase in access to use assets
- reduced overall expenses for housing, utilities, etc
- increased household income
18
Q
Challenges for SINGLE PARENTHOOD, ABOUT TO MARRY OR REMARRY
A
- moving from individual to joint financial planning patterns
- decreased financial independence
- new partners role in financial support for children
- deciding housing arrangements
- obligations for debts brought into marriage
- decisions regarding the pooling of monetary assets
19
Q
Financial tasks for SINGLE PARENTHOOD, ABOUT TO MARRY OR REMARRY
A
- obtain copies of credit reports of both impending partners
- develop individual and jt balance sheets and share financial info
- Share lists of debts, assets, and goals
- prepare prenup agreement with the assistance of legal counsel
- even if no prenup, share each other’s intentions and expectations regarding finance
- review existing life insurance policy ownership and Bene info and recalculate life insurance needs
- assess fringe benefit options as a married person rather than as a single person
- openly discuss the yours, mine and ours aspect of existing assets
20
Q
RETIRED SINGLE LIFE
A
Follows years of single life
21
Q
Positive aspects of RETIRED SINGLE LIFE
A
- use assets established
- investment and retirement assets had been established
- financial and career skills high due to years of experience
- credit history firmly established
- government retirement programs
22
Q
Challenges for RETIRED SINGLE LIFE
A
- deciding what to do with one’s spare time
- living within the limits of cash flow from pensions, investment and retirement accounts so as not to outlive income
- choosing housing given changed work status and new mobility
- increased need for health care
23
Q
Financial tasks for RETIRED SINGLE LIFE
A
- reassess one’s estate plan with special focus on inheritance aspect
- revise financial goals and budgets to reflect career stoppage
- select among leisure and volunteer activities
- select healthcare supplement insurance
- revise insurance program esp as it relates to life insurance
- revise letter of last instructions an advance directives
- address the possibility of selling current housing to buy a retirement home and possibility of a moe to alternative group housing arrangements
24
Q
RETIRED SINGLE LIFE, WIDOW/ER
A
Follows the death of a spouse shorty before or during retirement may come very late in life
25
Positive aspects of RETIRED SINGLE LIFE, WIDOW/ER
- retirement or pension plans in place
- current housing in place
- freedom to make own financial and goal oriented decisions
26
Challenges for RETIRED SINGLE LIFE, WIDOW/ER
- becoming solely responsible for financial management
- living within the limits of cash flow from pensions, investments, etc
- choosing future housing options
- possible declines in health status
- access to transportation resources
- making decisions alone
- having to accept the assistance of children in one's personal and financial life after years of independence
27
Financial tasks for RETIRED SINGLE LIFE, WIDOW/ER
- revise estate plan to reflect single status
- select options for possible needs for long term care
- become knowledgeable about retirement plan features and assumptions, revise as necessary
- select among housing alternatives
- share details of financial life with children and make wishes known concerning long term care, bequests and other issues
- address the possibility of selling current housing to buy a retirement home and the possibility of a move to alternative group housing arrangements
- make preliminary plans for the potential need for nursing home care
28
EARLY MARRIED LIFE
Encompasses the initial period of the relationship prior to the birth of the first child, may be very short in duration or last several years. Generally, to be viewed as transitional to the child rearing stages
29
Positive aspects of EARLY MARRIED LIFE
- dual earner potential enhances disposable income
- use assets enhanced as each brings items to the household
- possibility for one partner to support the others return to school for additional training or education
30
Challenges for EARLY MARRIED LIFE
- moving from an individual to a jt financial planning pattern
- career planning in light of obligations to partner
- accumulation of use assets
- potential to abuse credit in order to have the good life
- making joint housing decisions
31
Financial tasks for EARLY MARRIED LIFE
- discuss and resolve disagreements over money
- develop A budget and record keeping system that works for both
- resolve value and lifestyle differences
- select life and disability insurance as needed, revise other insurance
- plan for and consider opportunity costs of having children
- sAve for and consider purchase of buying a house or condo
- establish retirement accounts
- build an emergency cash reserve
- select among cash mgmt options and handling of daily shopping, bill paying, etc
32
CHILD REARING, EARLY PRESCHOOL YEARS
Covers preschool years of first born
33
Positive aspects of CHILD REARING, EARLY PRESCHOOL YEARS
- couples parents are often eager to be of assistance
- some use assets have been accumulated
- taxes reduced due to additional personal exemptions, child credits and the dependent care credit
34
Challenges for CHILD REARING, EARLY PRESCHOOL YEARS
- increased expenditures for food, utilities, and many other items related to children
- decreased income and career emphasis for both primary and secondary care givers
- coordinating parent and employee role demands
- making provisions for continued income should a breadwinner become disabled or die
- possible need for additions to or changes in housing arrangements
- availability and affordability of child care
35
Financial tasks for CHILD REARING, EARLY PRESCHOOL YEARS
- adjust budget for the extra mouth to feed, clothe, etc
- adjust healthcare plan to reflect growing family
- continue to fund retirement plan even if on a reduced basis
- reevaluate life and disability insurance plans and implement desired changes
- revise wills and select guardian for child in the event of death of parents
- decide upon extent of and where to obtain child care
36
CHILD REARING, SCHOOL YEARS
Covers the period between the first born entering school and the youngest child entering high school
37
Positive aspects of CHILD REARING, SCHOOL YEARS
- primary and possibly second breadwinner income continues to increase due to career progress
- broad spectrum of use assets
- values and financial goals established
- tax reduction opportunities due to child rearing
38
Challenges for CHILD REARING, SCHOOL YEARS
- juggling work and family life as children become more involved in outside activities
- desire to replace use assets with better quality items
- higher expenses for children's clothing, schooling, activities
39
Financial tasks for CHILD REARING, SCHOOL YEARS
- increase savings for children's education
- begin to bring debt under control if used heavily in previous stage
- revise life and di plans as necessary
- reevaluate career goals
- involve children in financial matters in order to teach them financial mgmt skills
- use allowances to teach children personal budgeting
- expand retirement savings
- review estate planning efforts and advance directives and revise
40
CHILD REARING, TEEN/COLLEGE YEARS
Extends from the beginning of high school for the first born until the youngest child leaves home after high school for additional education
41
Positive aspects for CHILD REARING, TEEN/COLLEGE YEARS
- values and goals clear
- improving financial situation
- money may be available for nonessential items
- possess many use assets
- both spouses may earn money income
42
Challenges for CHILD REARING, TEEN/COLLEGE YEARS
- increased child care and education expenses
- increased transportation expenditures
- possible increased responsibility for parents and or grandparents
43
Financial tasks for CHILD REARING, TEEN/COLLEGE YEARS
- continue to attend to retirement planning efforts
- fit college expenses into family budget
- complete financial aid forms and manage ownership of college savings to enhance financial aid eligibility
- reevaluate life insurance program
- coordinate vehicle ownership and insurance selection to reduce overall costs
- reevaluate career goals in preparation for empty nest stage
- assist parents in their own transition to retirement
- make plans with siblings or independently for possible emergency situations involving parents esp as related to long term care
44
EMPTY NEST
Encompasses the period of time between when the youngest child sets out on their own until retirement
45
Positive aspects of EMPTY NEST
- both spouses may earn money income
- strongest current financial position due to reduced expenditures
- housing mobility increases
- use assets fully established and may even exceed amount needed
46
Challenges for EMPTY NEST
- career burnout possible
- desire to replace use assets with better quality
- children may need occasional financial aid
- increasing health care needs
- increased concern for support of aging parents
47
Financial tasks for EMPTY NEST
- consider housing type and location
- add detail to aspects of retirement plan such as where, when, working after retirement, and fund w/d options
- update to include provisions for grandchildren in will
- consider tax free gifts for estate planning purposes
- consider professional financial planning assistance
- make plans with siblings or independently for possible emergency situations involving parents esp related to long term care and estate settlement
48
MARRIED RETIREMENT
Covers the period of time from when the first spouse retires until one spouse passes away; can last for twenty or more years based on typical retirement ages and current life expectancy
49
Positive aspects for MARRIED RETIREMENT
- geographic mobility increases
- use assets have been sufficiently accumulated
- investment assets make up the bulk of the couples net worth
- income tax burden is lessened
- transportation, clothing, and other work related expenditures decline
50
Challenges for MARRIED RETIREMENT
- income may be limited or at least lower than during working years
- concern about outliving income due to inflation or declines in earnings on investments
- declining health
- what to do with increase leisure time
51
Financial tasks for MARRIED RETIREMENT
- est a formal plan for withdrawals from retirement accounts
- make health care decisions including Medigap policies and long term care insurance
- update all estate planning and advance directive decisions
- address the possibility of part time work and volunteer activities
- address the possibility of selling current housing to buy a retirement home and the possibility of a move to alt, group housing
- switch portions of one's portfolio to lower risk investments
- make preliminary plans for the potential need for nursing home care
- make burial and funeral plans including the possibility of prepaying these expenses
52
PRE-DIVORCE AND/OR SEPARATION PHASE
While difficult to deal with, an imminent or contemplated divorce can be much less traumatic financially if planned for financially
53
Positive aspects for PRE-DIVORCE AND/OR SEPARATION PHASE
- ability to tap personally owned non-marital property and assets
- assistance of supportive family members and friends
- protections afforded via the legal system and staff
- career and employment skills, even if dormant
54
Challenges for PRE-DIVORCE AND/OR SEPARATION PHASE
- general lack of feeling of control due to emotional state
- probable inability to maintain current level of living once divorced and while separated
- joint assets may be frozen and unavailable
55
Financial tasks for PRE-DIVORCE AND/OR SEPARATION PHASE
- prepare a personal and a joint balance sheet
- est a list of all creditors, insurers, financial institutions, and to with whom one has financial relationships
- as necessary, inform those above of the impending change in status and established new address for mailing and communications
- obtain copies of most recent statements from all of the above and tax returns for the past several years; place in the custody of an attorney or other trusted individual
- maintain individual ownership status on individually owned assets and open no new joint credit accounts
- establish individual credit and bank accounts if none have been
- do not move out of marital resident before discussing with legal counsel
- obtain copies of pension plan features and rules and recent statements for both spouses
- obtain copies of wills for both spouses
- send for a copy of one's credit report
- move ownership of a car into own name
- review fringe benefit options as an impending single person
56
Early single life
Encompasses the first 5-7 years of one's career, usually is viewed as temporary and transitional to later stages of life
57
By the time a person reaches his 40s or 50s, he can generally expect his income to be greater than his expenses?
A True
B False
A True
58
```
People who find themselves caring for their parents while still bearing the financial burden of children are known as
A The wrap generation
B The sandwich generation
C The layered generation
D Multi-generationals
```
B The sandwich generation
59
```
Which age group would most likely consider saving and paying for a child's education a higher priority than saving for retirement?
A ages 26-30
B ages 31-35
C ages 41-45
D ages 46-50
```
C ages 41-45
60
```
A person's attitude about retirement savings is influenced by:
A education level
B. Age
C. Culture
D. All of the above
```
D. All of the above
61
Counseling younger clients about saving for retirement presents a challenge because
A. Most are already aware of the need for saving early
B. Many are reluctant to postpone current consumption since "there's always tomorrow"
C. Most are living beneath their means
D. Few, if any, have extra dollars to put away
B. Helping younger clients recognize time is one of their most valuable assets is one of the ways you can add significant value to their overall retirement plans
62
```
When counseling younger clients on saving for retirement, it is important to emphasize that the greatest asset they have is
A. Their take home-pay
B. An education
C. Time
D. A home
```
C. Time
63
```
Randy Carson, age 31, has just been given a raise and has decided to put $100/mo into some sort of savings vehicle. He has several options, but doesn't know which would be the best for long-term savings. Of the following options, which would be the wisest choice for Randy?
A. A non-deductible IRA
B. His employers tax deferred 401k
C. A bank savings account
D. A checking account
```
B. If the employer offers matching contributions, this choice makes even more sense.
64
Which of the following would most likely be considered an obstacle to sound financial planning?
A. Buying a house
B. Saving for retirement
C. Having children and needing to save for their college education
D. Unexpected events, such as death or divorce
D. Unexpected events
65
In order to deal with unexpected events, such as job loss, financial professionals recommend that a person
A. Maintain an emergency fund of 3-6 months take home pay
B. Keep a line of credit that can provide a loan when necessary
C. Borrow from her retirement account
D. Sell off some assets to generate income during the crisis
A. Emergency fund
If no emergency fund exists, borrowing against a line of credit is usually preferable to borrowing against a retirement plan. The loss of time and potential growth in a retirement account makes borrowing against it a very expensive alternative in the long run.
66
```
A person who is laid off from a job is entitled to continue his health insurance coverage under
A. ERISA
B. OSHA
C. FLSA
D. COBRA
```
D. COBRA
67
Darla is terminating employment to go work for another employer. She has to come to you for counseling to find out what will happen to her retirement benefits from her employer's defined contribution plan. Which of the following issues should you consider and be prepared to address?
A. Hoe much of Darla's benefits are vested
B. Whether her new employer will accept a rollover of her retirement assets
C. What will happen to the account if she leaves it with the current employer
D. All of the above are issues that should be discussed with Darla
D. All of the above
68
In which lifecycle stage is a person most likely to be in the strongest current financial position due to reduced expenditures and the highest annual earnings relative to other stages?
A. Child rearing stage, elementary through high school years
B. Retirement stage, either married or single
C. Empty nest stage
D. Early child rearing stage, preschool
C. Empty nest
69
After America became industrialized, retirement became more common because
A. Older people didn't want to live with relatives
B. Increasing prosperity meant people could afford it
C. Employers preferred younger workers
B. Increased prosperity
70
The life course can be thought of as ______, ________and ___________.
A. Four ages, three boxes, the economic life cycle
B. Three boxes, two ages, the economic life cycle
C. Four ages, three boxes, the economic career cycle
A. Four ages, three boxes, the economic life cycle
71
The third age is a time of:
A. Independence, maturity, responsibility, and earnings/savings
B. Dependence, immaturity, socialization and education
C. Self development, satisfaction, opportunity and fulfillment
C. Self development, satisfaction, opportunity and fulfillment
72
Behavioral economics seeks to understand why individuals:
A. Behave rationally and how to reduce negative economic behaviors
B. Don't always behave rationally and how to stimulate positive economic behaviors
C. Don't always behave rationally and how to minimize negative economic behaviors
B. Don't always behave rationally and how to stimulate positive economic behaviors
73
A best practice approach means
A. Always doing your best
B. Getting a certification before practicing
C. Using research to guide practice
C. Using research to guide practice
74
The emerging field of Retirement Economics will help to ________.
A. Maximize retirement portfolio returns
B. Improve retirement knowledge and decision making
C. Determine the optimal level of retirement income
B. Improve retirement knowledge and decision making
75
A practical definition for retirement readiness is:
A. Being prepared to make decisions that maximize well being in retirement
B. Reaching "Normal Retirement Age" under an employer pension
C. Achieving w retirement income equal to 70% of pre-retirement income
A. Being prepared to make decisions that maximize well being in retirement
76
Well-Being means _____, ______, and ________.
A. Well off, well fed, worry free
B. Health, happiness, and prosperity
C. Healthy, wealthy and wise
B. Health, happiness, prosperity
77
The three domains of the Retirement Readiness model are:
A. BioMedical, PsychoSocial, GeoFinancial
B. GeoPolitical, BioMedical, PsychoBehavioral
C. GeoEconomic, BioPhysiological, PsychoSocial
A. BioMedical, PsychoSocial, GeoFinancial
78
Define Baby Boomers
The generation of Americans born between 1946-1964.
79
Define behavioral economics
Theory that seeks to understand why individuals don't always behave rationally and how to stimulate positive economic behaviors
80
Define BioMedical domain
One of the three domains of retirement readiness that related to health and healthcare in retirement
81
Define economic life cycle
Hypothesis about the retirement stage of life that assumes individuals are rational agents and seek to smooth their consumption patterns over higher and lower earning periods of the life cycle by saving in times of high earnings and drawing on savings or credit during periods of low earnings
82
Define GeoFinancial domain
Domain of retirement readiness which provides information on where and how people are prepared for their retirement n terms of where they live and their financial situation
83
Define gerontology
The study of human aging
84
Define PsychoSocial domain
The retirement readiness domain which provides information on the personal and interpersonal (social) readiness for retirement
85
Define retirement income adequacy
A common way of assessing retirement readiness through retirement income and assets that assumes that money alone creates well being
86
Define retirement readiness
Means being prepared to maximize well being in retirement
87
Define The New Retirement
Where people are living longer, retiring earlier and retiring to activities of new careers that create additional financial resources anywhere from ages 55-70
88
Define The First Age
A stage of life depicted by dependence on others, immaturity, need for socialization and education
89
Define The Second Age
A stage of life that is depicted by independence, maturity, responsibility and earnings/saving
90
Define The Third Age
The stage of life that is the peak of self development and life satisfaction
91
Define The Fourth Age
A stage of life depicted by dependence on others, physical and mental decline, and eventual death
92
What are the three boxes of life?
Created by social and institutional forces where life is segmented into artificial boxes of education, work and leisure, making transitions from one state to the other difficult
93
Define Well-Being
A state of being characterized by health, happiness, and prosperity
94
Define central tendencies
The communication characteristics of a generation due to common or shared experiences during early years/formation and marked by that passage together in history
95
Define silent generation
The generation of Americans born before 1946
96
The Silent Generation is characterized by:
A. Belief in hard work, duty, resistance to finance help, distrusts financial institutions
B. Belief in hard work, duty, resistance to financial help, does not embrace personal growth concepts
C. Belief in hard work, duty, resistance to financial help, embraces personal growth concepts
D. Belief in hard work, duty, desires financial help, embraces personal growth concepts
B. Belief in hard work, duty, resistance to financial help, does not embrace personal growth concepts
97
The Boomer generation is characterized by being:
A. Individualistic, less financially savvy than Silent Generation, placing a high priority on home life, distrusting of institutions
B. Individualistic, more financially savvy than Silent Generation, placing a high priority on home life, trusting of institutions
C. Individualistic, more financially savvy than Silent Generation, placing a high priority on home life, distrusting of institutions
D. Individualistic, less financially savvy than Silent Generation, placing a high priority on home life, trusting of institutions
C. Individualistic, more financially savvy than Silent Generation, placing a high priority on home life, distrusting of institutions
98
Someone with a natural Influencing style should adapt their communication for someone with a Steady/Relating style by:
A. Slowing down, providing facts, and explaining details well
B. Being openly friendly, giving personal recognition, and building personal relationships
C. Giving choices and options moving to tasks quickly
D. Listing and building trust, being sincere, giving them time to think
D. Listening and boring trust, being sincere, giving them time to think
99
A high D behavior style has a:
A. Fast paced speaking style and is not very task oriented
B. Slower paced speaking style and is very task oriented
C. Faster paced speaking style is very task oriented
D. Slower paced speaking style and is not very task oriented
C. Faster paced speaking style and is very task oriented
