Foundations of Retirement Planning part one Flashcards
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The group of people born between 1946 and 1964 are known as
A] baby boomers
B] the greatest generation
C] an affluent generation
D] the prewar generation
A] baby boomers
Which of the following characteristics is considered to be the most significant factor in deciding whether someone is qualified prospect?
A) needs and values your products and services
B) can afford to pay your products and services
C) is insurable or financially suitable
D) can be approached by favorable basis
D] can be approached on a favorable basis
Witch of the fallowing roadblocks to retirement saving is perhaps the biggest?
A] the tendency to spend all income
B] unexpected expenses
C] frequent employment changes
D] other accumulation needs
A] the tendency to spend all income
Which of the following statements concerning the silent generation is correct?
A] none of them have retired yet
B] they have little need for retirement planning
C] members of this group were born prior to 1946
D] as a group, they suffered economic decline following world war two
C] members of this group were born prior to 1946
Which of the following prospects sources involves any influential person who knows you, has a favorable opinion of you, agrees to recommend you to others?
A] centers of influence
B] networking
C] seminars
D] lists
A] centers of influence
Which of the following is one of the five phases of retirement planning a client moves through his or her lifecycle?
One. Increase preparation and visualization fees
Two. Decision phase
A] one only
B] two only
C] both one and two
D] neither one nor two
C] both one and two
which of the following statements regarding critical issues that affect retirement planning is [are] correct?
One. The face of retirement is changing as more workers expect to exit the workforce completely upon retirement
Two. Financial needs during retirement are met from three primary sources, often referred to as the legs of a three-legged stool
B] two only
Which of the following occurs in the analysis of information step of the selling/planning process?
One. The advisor looks at the prospects current situation and future goals in order to evaluate appropriate strategies for the prospect
Two. The advisor analyzes the prospect’s financial risk tolerance, risk management strategies, and risk exposures.
A] one only
D] two only
C] both one and two
D] neither one nor two
C] both one and two
All of the following are motivating factors for clients to begin planning for retirement EXCEPT
A] Retirement may last longer than planned because Life expectancies continue to rise
B] the tendency of most people to use their full after-tax income to support their current standard of living
C] starting early can mean the difference between success and failure
D] careful planning requires preparing for contingencies
B] the tendency of most people to use their full after-tax income to support their current standard of living
Each of the following is an aged-based market segment for retirement planning identified in the text EXCEPT
A] under age 45
B] ages 45 to 61
C] ages 55 to 65
D] age 62 And older
C] ages 55 to 65
Which of the following best describes when the savings phase of retirement planning should begin?
A] upon the clients reaching age 30
B] at the beginning of the client’s career
C] when the client purchases his or her first home
D] after the client has his or her first child
B] at the beginning of the client’s career
Which of the following American generations can be described as risktakers, self oriented, and practical?
A) silent generation
D)baby-boom generation
C) generation X
D) millennial generation
C] generation X
The marketing strategy that allows the advisor to customize his or her approach and presentations based on the common needs and characteristics of prospects in a particular market is known as which of the following?
A] market penetration
B] market segmentation
C] market share
D] market promotion
B) market segmentation
Which of the following definitions of networking as it relates to the retirement selling/planning process is correct?
A] networking is the broadcasting of retirement planning infomercials on television and radio
B] networking is a competitive relationship among financial advisors who are vying for retirement planning prospects on an ongoing basis
C] networking is the continual communication and sharing of ideas of prospects with others whose work does not compete with the financial advisor’s
D] networking is the is the obtaining of a steady stream of referrals from clients for whom the advisor has conducted retirement planning
C] networking is a continual communication and sharing of ideas and prospects with others whose work does not compete with the financial advisor’s
Financial needs during retirement are met by three primary sources of income. Which of the following is [are] among those three?
One. Social Security benefits
Two. Inheritances
A] one only
B] two only
C] both one and two
D] neither one nor two
A] one only
Which of the following statements concerning active life expectancy is [are] correct?
One. Active life expectancy is the number of years a person can anticipate living without a disability
Two. Although life expectancy is increasing, active life expectancy is actually decreasing.
A] one only
D] two only
C] both one and two
D] neither one nor two
A] one only
Which of the following statements concerning that age 62-and-older market is [are] correct?
One. Now that prospects in the age-62-and-older market are near or in retirement, they have become less concerned about health care issues.
Two. Prospects in this market worry less than younger prospects that their monthly income and assets will be sufficient to cover their needs.
A] one only
B] two only
C] both one and two
D] neither one nor two
D neither one nor two
All of the following our steps in the selling/planning process EXCEPT
A] analyze the information
B] implement the plan
C] Ask for referrals
D] meet the prospect
C] ask for referrals
All of the following statements regarding the changing face of retirement are correct EXCEPT
A] Current workers expect to work longer than current retirees did before they retired
B] current workers are most likely to say that personal savings will be their most important source of retirement income
C] the trend towards retirees who work is unlikely to continue
D] retirees are increasingly was responsible for caring for their parents and children
C] the trend toward retirees who work is unlikely to continue
All the following are advantages of seminars as a prospecting source EXCEPT
A] They eliminate the need for the follow-up appointments
B] they enable the advisor to reach several prospects at one time
C] they help the advisor identify qualified prospects
D] they spotlight the adviser as the expert in his specialized area.
A] thet eliminate the need for the follow up appointments
A cash flow statement does which of the following?
A] indentifies a client’s assets and liabilities
B] estimates a client’s net worth
C] calculates the retirement funding need for a preretiree
D] summarizes a client’s financial activities over a specified period of time by comparing cash inflows and inflows
D] summarizes a client’s financial activities over a specified period of time by comparing cash inflows and inflows
Net worth is defined as the difference between which of the following?
A] nonfinancial assets and investment assets
B] gains and looses
C] income and expenses
D] assets and liabilities
D] assets and liabilities
What are the three traditional sources of retirement income?
A] Social Security, savings, and welfare
B] Social Security, pensions, and savings
C] Social Security, savings, and investments
D] Social Security, pensions, and work afer retirement
B] Social Security, pensions, and savings
Which of the following best describes the Rule of 72?
A] It is the basis used to calculate the return on an investment
B] It is a quick method to calculate the present value of an investment
C] It can be used to approximate the number of years it takes an investment to triple in value
D] It can be used to approximate the interest rate required for an investment to double in value
D] It can be used to approximate the interest rate required for an investment to double in value
If you invest$1,000 today and earn 3 percent compunded annually, what will it be worth in 6 years? (use the time-value-of-money interest tables in Appendix A of the textbook to determine the answer.)
A] $837
B] $1,194
C] $5,417
D] $6,468
B] $1,194
Your prospect plans to retire in 15 years. He plans to set aside $4000 each year starting immediately. He estimates that he can maintain a 5 percent annual interest rate for the entire period. How much will he have at the end of the 15 year period? [Use of the time value of money interest tables Appendix A of the textbook to determine the answer.]
A] $68,316
B] $82,316
C] $89,104
D] $90,628
D] $90,628
Your prospect wants to accumulate $50,000 over the next 10 years to help pay her son’s college costs. Assuming her investment will return 4% annually, how much does she need to invest at the beginning of each year to reach her goal by the end of the 10th year? [use the time value of money interest tables in appendix A of the textbook to determine the answer.]
A] $2,002
B] $4,004
C] $6,164
D] $8,006
B] $4,004
Which of the following may be eligible for survivor benefits at the death of a wage earner?
One. A surviving sibling
Two. Independent parent who is aged 62 or older
A] one only
B] two only
C] both one and two
D] neither one nor two
.
All of the following statements concerning the time value of money are correct EXCEPT
A] the interest rate received on a sum of money is the only factor to consider when saving.
B] a small sum of money can grow to a substantial amount when interest is compounded, given enough time.
C] a dollar received today is worth more than a dollar received in the future.
D] the higher the interest rate and the longer the time horizon, the higher the future value will be.
A] the interest rate received on a sum of money is the only factor to consider when saving.
All of the following statements regarding social security retirement benefits are correct except
A] full retirement age is gradually increasing to age 67 but the year 2027.
B] the spouse of an eligible covered spouse is entitled to benefits beginning at age 62 or earlier in some circumstance
C] dependent children of an eligible worker are entitled to benefits.
D] A covered worker is entitled to a monthly benefit equal to two times his or her PIA at full retirement age
D] A covered worker is entitled to a monthly benefit equal to two times his or her PIA at full retirement age
Which of the following is the correct term for a full or part-time job involving little responsibility, bitch a return he holes after returning from a career and before stopping work in Turley?
A] phase retirement
B] retirement income credit
C] Bridge job
D] reduced wage base
C] Bridge job
Time value of money is BS on which of the following concepts?
A] A dollar received today is worth more than a dollar received in the future
D] a dollar received today it’s worth less than a dollar received in the future
C] compound interest can lead to come Pontaxit edition
D] compound Toxish and Kennedy to compliment dress
A] A dollar received today is worth more than a dollar received in the future
It comes home and will interest rate of 60%, a single sum of one dollar both double invaluable weeks two dollars in the prospering how many years?
A] 3 years
D] 9 years
C] 18 years
D] 24 years
D] 24 years
Which of the following statements concerning the cash flow statement is correct?
A] it is based on projections of future income and expenses
B] it has three basic components Ossette Leadville tease, I’m met cash flow.
C] it classifies annual expenses as either fixed or discretionary
D] it shows the clients wealth [net worth] at a point in time
C] it classifies annual expenses as either fixed or discretionary
Future retirees are more likely to work then in the past four bits of the following reasons?
One. People are living longer and thus will have more retirement years to fund
Two. The earnings test for social security benefits at at or beyond full retirement age has been given it is
A] 1only
D] tool only
C] both one and two
D] neither one nor to
C] both one and two
Other things being equal, which of the following changes will increase to future value of a present sum of money?
One. An increase in the interest rates use in the component process
Two. A decrease in the number of years over which component occurs
A] one only
B] tune only
C] both one and two
D] neither one nor two
A] one only
Which of the following statements concerning the name asked sets is [are] correct?
One. For purposes of the financial position statement? It is necessary to know whether assets are purchased for cash? Finance by boring? Or received as gifts are inheritances.
Two. It is common practice to miss assets on the financial position statement at the original purchases price instead of their current fair market value.
A] one only
B] to only
C] both one and two
D] neither one nor two
D] neither one nor two
All of the following are eligible to receive social security retirement benefits at set
A] a retired covert worker
D] this post of a covert worker
C] the parent of a covered worker
D] dependent child of a covert worker
C] the parent of a covered worker
Hey clients net worth can increase as a result of the following accept
A] appreciation in the value of his or her assets
B] addition assets through route retaining income
C] addition to assess true and inheritance
D] addition to assess by making lifetime gifts
D] addition to assess by making lifetime gifts
All of the following statements concerning cost for time and I am/are budgeting are correct at set
A] cash flow planning is identifying courses of action that will help optimize neck cash flow
B] cash flow planning is effective only when it proceeds cash flow analysis
C] budgeting is a process of creating the phone and a specific time for spending and investing resources available for the client
D] budgeting provides both a means of financial and self-evaluation and a guideline to measure actual performance
B] cash flow planning is effective only when it proceeds cash flow analysis
Which of the following best describes the definition of goals and retirement planning?
A] they must be long-term in nature
B] they must have financial significance
C] they must not conflict with each other
D] they must be definable, Measurable, Achievable,Realistic
D] they must be definable, Measurable, Achievable,Realistic
One of the most critical aspects of effective communication means being able to do which of the following?
A] listen effectively
B] make your position known
C] prejudge your prospects needs
D] Explain your products concisely
A] listen effectively
One reason to use an agenda when meeting with a prospect is to
A] increase anxiety and discomfort
B] advertise your products and services
C] let your prospect know you are in charge
D] let your prospect know what is expected of him or her
D] let your prospect know what is expected of him or her
Which of the following statements about retirement planning is correct?
A] a fact finder of some sort should be completed this in the context of any financial product sale
B] facts are more important than feelings in the retirement planning process
C] most people nearing retirement have the same expectations
D] retirement means stopping work at is 65
A] a fact finder of some sort should be completed this in the context of any financial product sale
An income replacement ratio
A] is difficult to calculate
B] includes factors for inflation and longevity
C] should never be used because it is not exact
D] approximates the amount of income that will be needed in retirement
D] approximates the amount of income that will be needed in retirement
Which of the following best describes the retirement income gap?
A] the difference between the replacement ratio needed at retirement and the pension benefits expected
B] the time lag between application for and receipt for and receipt of Social Security retirement benefits
C] the difference retrieve the amount of the early retirement reduction in Social Security benefits and the full retirement benefits
D] the difference between the amount of money your prospects need and what they expect to have for retirement
D] the difference between the amount of money your prospects need and what they expect to have for retirement
Which of the following statements concerning the personal retirement planning review is correct?
A] the use of this mini fact finder is mandatory
B] it can serve as an additional motivator to purchase financial products
C] it is sufficient to gather all the information you will need about a prospect
D] it is not to be used for qualifying a prospect for retirement planning
B] it can serve as an additional motivator to purchase financial products
When in the initial into you should the preliminary discovery agreement or trial close be use?
A] after completing a more thorough fact finder and feeling finder
B] after discussing the need for retirement planning and asking the prequalification questions
C] when concluding the fact-finding interview
D] when presenting the interview agenda to the prospect
B] after discussing the need for retirement planning and asking the prequalification questions
Within which section of the retirement planning fact finder is the dollar commitment for the amount the prospect can afford to budget for retirement planning obtained?
A] personal data and retirement goals
B] quantitative data
C] retirement income sources
D] calculations and interest tables
B] quantitative data
All of the following statements concerning fact-finding are correct EXCEPT
A] you should limit yourself to asking only factual and quantitative questions
B] recording the feelings and values revealed during the fact finding process is recommended
C] involving the prospect gives him or her an ownership interest in your financial product recommendations
D] your prospect must collaborate in this process
A] you should limit yourself to asking only factual and quantitative questions
Which of the following expenses is likely to increase for retirees?
A] FICA taxes
B] work-related expenses
C] medical expenses
D] home ownership expenses
C] medical expenses
The approach to information gathering that uses a fact finding form that first broadly covers all of the prospect’s financial needs and then narrows the discussion to prioritized dominant needs is the
A] deductive approach
D] inductive approach
C] single need approach
D] dominant need approach
A] deductive approach
In estimating retirement savings, which of the following corresponds to the prospect’s projected growth rate and compensation, thereby keeping the rate of savings at a constant percentage?
A] step-up rate
B] capitalization of equity
C] accumulation factor
D] standard of living
A] step-up rate
The difference between which of the following best describes the retirement income gap?
A] age 65 and the prospect’s life expectancy
B] the deductibility threshold and the excess above the threshold for qualifying medical expenses
C] the amount of money that is necessary to reach the retirement income goal and the amount anticipated from all available sources
D] the estimated inflation rate and the long-term inflation rate
C] the amount of money that is necessary to reach the retirement income goal and the amount anticipated from all available sources
Which of the following statements regarding the goals of retirement planning is [are] correct?
One. Retirement planning has become less important today because of changes of our socioeconomic institutions and because most people know anticipate working at least part-time during the retirement years
Two. The primary responsibility for an advisor in planning for a prospects’ retirement is to make them aware that they are making lifestyle choices about their retirement security every day
A] one only
B] two only
C] both one and two
D] neither one nor two
B] two only
Which of the following statements concerning the level of income that a retiree needs to sustain throughout his or her retired life is [are] correct?
One. The retirement income gap method must be used for prospects at or near retirement because they can closely approximate their retirement income budget
Two. The Expense method generally works well for younger prospects because they cannot accurately estimate their retirement expenses but they can determine the standard of living they want to enjoy during retirement
A] one only
B] two only
C] both one and two
D] neither one nor two
D neither one nor two
Which of the following statements concerning forecasting the rate of inflation is [are] correct?
One. The inflation assumption rate chosen depends on the prospect’s spending habits, current age, and risk tolerance
Two. The lower the inflation rate projected, the greater percentage of salary the prospect needs to save for retirement
A] one only
B] two only
C] both one and two
D] neither one nor two
A] one only
All of the following are assumptions required in the retirement planning process EXCEPT
A] retirement age assumption
B] longevity assumption
C] income requirement assumption
D] insurability assumption
D] insurability assumption
To establish rapport in the initial interview, an advisor must create an environment that promotes prospect openness by doing all of the following EXCEPT
A] alleviating the prospect’s concerns
B] responding to the prospect’s social style
C] talking most of the time to the prospect
D] mutually agreeing to an agenda for the interview
C] talking most of the time to the prospect
All of the phone they are considered major sources of retirement income at set
A] charity
B] personal savings
C] Social Security benefits
D] pension distributions
A] charity
Which of the following is the most widely known measure of inflation?
A] the wall street journal
B] consumer price index
C] US Department of Commerce
D] survey of current business trends
B] consumer price index
Which of the following statements about planning for life events is true?
A] it is impossible to plan for all life events
B] planing allows you to control all life events
C] an important part of the planning process is recognizing the need for contingency planning
D] planning is impossible unless you ignore uncertain life events
C] an important part of the planning process is recognizing the need for contingency planning
Which of the following is a program designed to provide medical expense of assistance to the poor?
A] Medigap
B] Medicare
C] Medicaid
D] state-administered Medicare
C] Medicaid
Which of the following is an effective technique for dealing with information?
A] seek long-term fixed income investments
B] discontinue saving during periods of inflation
C] withhold more income tax than is needed to get a year end refund
D] reposition assets to well-diversified portfolios that are likely to grow more rapidly than the Rate of inflation
D] reposition assets to well-diversified portfolios that are likely to grow more rapidly than the Rate of inflation
Which of the following statements concerning benefits received from a qualified long-term care insurance policy is correct?
A] they are included in income to the extent that they meet at 7.5% threshold for medical expense deductions
B] they are excluded from income taxation up to the government’s annually specified in the limit
C] they are taxable unless long-term care expenses exceed an IRS limit
D] they are taxable income
B] they are excluded from income taxation up to the government’s annually specified in the limit
After paying the deductible, which of the following is the co-insurance amount required for most services covered under part B of Medicare?
A] 10%
B] 20%
C] 30% percent
D] $100
B] 20%