Chapter 18 – Starting Early: Retirement Planning
128. (p. 596) Beverly Foster is planning for her retirement. She has determined that her car is
worth $10,000, her home is worth $150,000, her personal belongings are worth $100,000, and
her stocks and bonds are worth $300,000. She owes $50,000 on her home and $5,000 on her
car. What step in the retirement planning process is Beverly completing?
129. (p. 596) Nancy Moore is planning for her retirement. She guesses that by the time she
retires her mortgage will be paid off on her home. She expects she will pay $600 a month on
food and that her medical expenses will be $400 a month. She also estimates that she will
spend $400 a month on things that she enjoys like traveling, going to concerts, reading and
other similar activities. What step in the retirement planning process is Nancy completing?
Chapter 18 – Starting Early: Retirement Planning
130. (p. 596) Rebecca Murphy is planning for her retirement. She has done some checking and
thinks she will get about $1,025 a month from Social Security. She also thinks her pension
plan will pay her about $1,125 per month. In addition, she has some personal retirement
accounts that she thinks will pay her $500 per month. What step in the retirement planning
process is Rebecca completing?
131. (p. 597) Karen Endicott is planning for her retirement. She knows that after she retires she
will no longer need her own single family dwelling. She plans on buying a condominium in
Chicago, close to the bus and train line and close to a grocery store. What step in the
retirement planning process is Karen completing?
Chapter 18 – Starting Early: Retirement Planning
132. (p. 622) Janice Jacobs is planning for her retirement. She knows what assets and liabilities
she has now and expects to have in the future. She knows what her spending patterns are
likely to be and adjusted them for inflation. She also has identified all of her sources of
income after she retires. Now she is sitting down and planning her income and expenses each
month. After she has finished this plan, she knows that she has enough income to cover her
expected expenses and still have $200 extra each month for emergencies and other unplanned
activities. Even with inflation, she thinks she can sustain this plan for approximately 30 years.
What step in the retirement planning process is Janice completing?
133. (p. 597) What is most likely to be an individual’s single biggest asset?
Chapter 18 – Starting Early: Retirement Planning
134. (p. 597) Ted Riley owns a vehicle worth $25,000 and a home worth $225,000. He has a
checking account balance of $500, a savings account balance of $1,500, and a mutual fund
worth $85,000. His personal assets are worth $90,000. He still owes $10,000 on his car,
$100,000 on his home, and $1,000 on his credit card. What is Ted’s net worth?
135. (p. 604) As people reach retirement age, what is the most likely housing choice they would
make? Assume they are moving to a new geographic area.
Chapter 18 – Starting Early: Retirement Planning
136. (p. 606) When should you apply for Social Security?
137. (p. 607) What happens to your Social Security income if you retire early?
138. (p. 607) If you work after age 65, your Social Security benefit will increase by one-fourth of
one percent for each month you delay retirement up until what age?
Chapter 18 – Starting Early: Retirement Planning
139. (p. 610) John Carpenter works as a manager of a retail store. His employer has been setting
money aside for him each month in the amount of 7 percent of his monthly earnings. What
type of retirement plan does John have?
140. (p. 610) As its retirement plan contribution, Aaron Copeland’s employer has been buying
shares of the company’s stock for Aaron’s benefit. What type of retirement plan does Aaron
most likely have?
141. (p. 610) The contribution Billy Freniere’s employer makes to his retirement plan depends on
the profits of the company. What type of retirement plan does Billy have?
Chapter 18 – Starting Early: Retirement Planning
142. (p. 610) Sarah Logan is a professor at a public university. Her employer makes nontaxable
contributions to a plan in her name and reduces her salary by the same amount. What type of
retirement plan does Sarah have?
143. (p. 617) Ben Carmichael has been making contributions into an individual retirement
account for his retirement. His contributions are tax deductible as his employer does not offer
a retirement plan. What type of individual retirement account does he have?
144. (p. 617) Jeremiah Brown has been making contributions into an individual retirement
account for his retirement. His contributions are not tax deductible but his earnings
accumulate tax free. What type of individual retirement account does he have?
Chapter 18 – Starting Early: Retirement Planning
145. (p. 617) Bruce Willis has been making contributions into an individual retirement account
on behalf of his nonworking wife. What type of individual retirement account is this?
146. (p. 618) Sam Waterston has been making contributions into an individual retirement
account to help pay for his children to go to college. Which type of account is he most likely
using?
147. (p. 603) At a 3 percent rate of inflation approximately how many years will it take for prices
to double?
Chapter 18 – Starting Early: Retirement Planning
148. (p. 595) Which is correct with respect to life expectancy?
149. (p. 597) Jasmine Smith owns a condo worth $240,000, a car valued at $25,000, and
miscellaneous assets worth $7,500. She owes $185,000 on the condo and $15,000 on the car
and has no other debts. Her retirement account, in which she is fully vested, contains $27,500
in mutual funds. She is insured with a $500,000 term life insurance policy. What is her net
worth?
150. (p. 613) Which of the following is typically a characteristic of a defined benefit plan?
Chapter 18 – Starting Early: Retirement Planning
151. (p. 613) Which of the following is typically a characteristic of a defined contribution plan?
152. (p. 613) Which one of the following is not a typical characteristic of a defined benefit
plan?
153. (p. 613) Which one of the following is not a typical characteristic of a defined contribution
plan?
Chapter 18 – Starting Early: Retirement Planning
154. (p. 623) Which one of the following is not a private source of retirement income?
155. (p. 618) Which of the following is(are) a feature of an Education IRA?
156. (p. 596) What are the key steps in retirement planning?
Chapter 18 – Starting Early: Retirement Planning
157. (p. 594) Why is retirement planning important?
158. (p. 597) Why is it important to review your assets and liabilities before your retirement?
159. (p. 600) What types of expenses can be lowered or eliminated during retirement?
Chapter 18 – Starting Early: Retirement Planning
160. (p. 601) What types of expenses might increase during retirement?
161. (p. 604-605) What types of housing options are available to retirees?
162. (p. 605) How can retirees avoid housing traps?
Chapter 18 – Starting Early: Retirement Planning
163. (p. 606) What are the possible sources of income for retirees?
164. (p. 610-612) Explain the difference between a defined-contribution and defined benefit plan.
Chapter 18 – Starting Early: Retirement Planning
165. (p. 594) Describe some of the most common retirement misconceptions, and explain what
you should do if you hold to any of those misconceptions.