True or False Personal Finance Chapter 14

The best time to begin planning for retirement is at age 27. False
Annabelle works at Acme Cleaning Company. When she retires, her employer’s health insurance plan and Medicare should cover all her medical expenses. False
Bruce and Christopher are both retiring from Best Conditioning Company. They both should have the same amount of money in their retirement funds regardless of the lifestyle they should expect during retirement False
Cindy’s net worth should increase each year as she moves closer to her retirement. True
Housing and life insurance are so important to one’s retirement income that other invests can be ignored as you review your assets. False
When Don retires, his transportation expenses will likely increase False
Because of potential effect of inflation, individuals should underestimate the amount of money needed for retirement. False
The four primary sources of retirement income are employer pension plans, personal retirement plans, annuities, and public pension plans. True
A benefit of an employer pension plan is that taxes are eliminated False
An example of a defined-contribution plan is a stock bonus plan. true
a salary-reduction plan for a nonprofit organization is called a 4019k) plan false
Lora is a full time employee at Harley Davidson, Inc. She should be eligible to participate the company’s 401(k) plan to save for retirement true
A defined-benefit plan specifies the benefits that you will receive at retirement age. true
When Social Security was established, it was intended to provide less than 100 percent of one’s retirement income true
Social Security covers 97 percent of all workers in America True
About one out of every three Americans currently collects some form of Social Security benefit False
only people who are retired can receive a benefit from Social Security False
If you were born in 1960 or later, you will become eligible to receive Social Security benefits at the age of 67 False
Eight years ago, Thomas began investing in his Roth IRA. He is now purchasing his first home. He may withdraw some money from his Roth IRA tax-free and penalty-free for this purchase. True
The SEP IRA is the simplest type of retirement plan if a person is self-employed. True
When Paul leaves his job at Acme Bending Company, he may choose to move his 401(k) balance to a plan called a Rollover IRA. True
The longer money accumulates tax-deferred, the bigger the benefit True
Retirement means you will never work again False
People should never dip into their savings in retirement False
Your estate consists of everything you own True
Estate Planning is important for financial planning but not for retirement planning False
If you are single, then you should not have beneficiaries False
Every adult should have a written will True
If you die intestate, your beneficiaries will receive your estate. False
A traditional marital share will leaves everything to your spouse False
A traditional marital share will has some assets going into a trust to provide your spouse lifelong income that will not be taxed. True
A Stated Amount Will identifies the amount that will not go to your spouse False
If a will is found to be invalid, the result is called in-probate False
Probate is a short, quick process False
A holographic will has a holographic seal to prove its authenticity False
A holographic will is legal in all states False
A statutory will is one that is prepared with the help of an attorney False
If you are married, your estate will automatically pass to your spouse False
Only one will may legally be written during a person’s lifetime false
Changes to a will should be written in ink on the will and initialed. False
A power of attorney should handle the estate of the deceased person False
A copy of your living will should be distributed to your family doctor True
Another name for a will is a letter of last instruction False
A revocable trust cannot be changed or ended False
A disclaimer trust is appropriate for couples who do not have enough assets to need a credit shelter trust True
An inter vivos trust takes effect while you’re alive True
A testamentary trust takes effect while you’re alive False
An individual can give away up to $13,000 per year (as of 2009) before paying an inheritance tax to the IRS False

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