LUOA Personal Finance Module 5 Questions and Answers Graded A

LUOA Personal Finance Module 5 Questions and Answers Graded A Choose all people that could receive benefits from Social Security. -a child whose father died before retirement -a spouse of someone who receives Social Security benefits -a retired worker -a dependent parent of a worker who died -a person with a disability who cannot work When did Social Security go into effect? In 1935 with the signing of the Social Security Act Do you know anyone who receives Social Security Benefits? Yes Social Security benefits replaces about _____ of an average wage earner's income after retiring. Most financial advisors say retires need about ______ of their pre-retirement earnings in order to live at a comfortable level. 40% 70% Besides Social Security, most financial advisors would tell you that you also need what three other means for living comfortably in retirement? -investments -personal savings -private pensions Where does the tax revenue collected from Social Security deductions from payrolls go? to pay for Social Security benefits people are receiving currently Every Social Security dollar collected in taxes goes to a trust fund that pays monthly benefits to retirees and their families and to the disabled and their families. What are the percentages for each group? 85% for retiree benefits and 15% for disability benefits Retirement is no big deal. Most people have planned for their retirement years, and they will be ready to take it easy once they are retired. False Choose all practical ways a person can plan and prepare for retirement. -start saving for retirement when you are younger -know what Social Security may provide in retirement -evaluate how much income you will need to support you in retirement -participate in your employer's pension or savings plan to save on taxes -if self employed invest in IRA's or other diversified investments Choose all rules, guidelines and regulations that apply to defined benefit plans. -Promised benefits are based on a formula in the plan based on age, years of service, et cetera. -Retirees generally receive a monthly benefit payment upon retirement. -The Federal Government guarantees a portion of the benefits due through the Pension Benefit Guaranty Corp. -Employers can face penalties for not meeting federal standards and rules for managing pension accounts. -Employer funded plans must meet federal rules that set amounts that employers must contribute. Generally, defined contribution plans require employees to... contribute in order to establish these kinds of retirement plans. If an employee participates in a defined contribution plan and leaves his/her present employer for another job, what options does that employee have related to the money he invested in the plan? Choose all that apply. -the employee can transfer the account balance to an IRA -the employee can take a cash settlement, but may have to pay fines and taxes -the employee can transfer the account balance to another employer plan if available at his new job -the employee may lose some of the value of the plan if taken in a lump sum cash payment For defined contribution plans the federal government... provides no guarantee of benefits. If an employee withdraws money from retirement savings early the employee could... (choose the best answer) lose interest and principal, tax benefits and may have to pay penalties. Of the groups of people that receive Social Security benefits, what group receives the most in payments? retirees