Quiz: Are you Saving Enough for Retirement?
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About This Quiz
Saving for your retirement is very important and should be planned very carefully. Take this quiz to familiarize yourself with tips to help you plan your retirement savings.
If you are eligible to draw U.S. Social Security benefits when you retire, will they be enough to live on?
Though Social Security benefits might have been enough to live on in the past, it's widely accepted today that they will not be enough income to live on in the future.
What is net worth?
total assets minus total debt
Net worth is the total value of your assets minus your total debt.
Which is NOT an example of an asset?
Assets are the things you own outright, such as land, motor vehicles, money in bank accounts, stock and valuable jewelry.
How much money will you spend monthly during retirement?
50 to 60 percent of your pretax pre-retirement income
60 to 70 percent of your pretax pre-retirement income
70 to 90 percent of your pretax pre-retirement income
Experts advise that in retirement, you will likely spend 70 to 90 percent of your monthly pretax pre-retirement income.
What is a 401(k)?
retirement saving account
A 401(k) is a type of retirement savings account. Your employer deducts the contribution to your 401(k) from your wages. The income tax on the contributed amount is deferred until the time you withdraw money from it..
What is a Roth IRA?
employer-sponsored retirement plan
individual retirement plan
A Roth IRA is an individual retirement plan. Unlike a traditional IRA, Roth contributions are not tax-deductible.
What is compound interest?
interest earned on the principal amount plus its accrued amount
Compound interest accrues on the principal amount plus any interest that has been generated from the principal amount.
interest on the principal only
interest that slowly decreases over time
Why shouldn't you invest all of your retirement funds in one place?
A diversified retirement portfolio may be the safest way to invest your funds to minimize the chances of a major loss.
It's hard to get your money out.
What are bonds?
interest-paying debt security
Bonds are an interest-paying debt security. You buy a bond from an issuer, and the issuer pays you interest in return. Most bonds have a fixed term and rate of return.
How much of your investment portfolio should be in bonds?
the same percentage as your age
Financial experts recommend your bond portion should be whatever your age is. For example, if you are 40, bonds should be 60 percent of your investment portfolio.
What are stocks?
very old types of savings bonds
unit of ownership in a corporation
Stocks are units of ownership in a corporation. Stocks are tradable securities, and their prices frequently fluctuate.
How does the risk of treasury bills compare to stock investments?
Treasury bills have little to no risk, whereas stocks are considered to be high risk.
What level of risk is associated with stock investments?
Stock investments are considered to be high risk.
How do you diversify a stock portfolio?
Invest in a range of industries.
Invest in a range of countries.
Financial professionals recommend you diversify your stock portfolio by investing in different types of businesses and even in the economies of different countries.
If you are a homeowner with a mortgage, what should you do if interest rates are falling?
You may want to refinance your mortgage with a lower interest rate. Crunch the numbers first to see if the possible savings are worth making the change.
Increase your line of credit.
If you do refinance and have a lower monthly mortgage payment, what should you do with the extra money?
Increase your retirement savings contribution.
You should contribute to your retirement savings whenever possible.
How can you economize on investment fees?
Shop around for the lowest fees on your investment products.
Shop around for the lowest fees on your investment products, and remember that it's not a good idea to put your money in only one or two types of investments.
Only put your money in government savings bonds and certificates of deposit.
Make stock market trades yourself.
What's the best course of action if you want to increase your retirement savings?
Continue working past retirement age and continue investing as much as you can afford.
Which of the following is usually covered by long-term care insurance?
This type of insurance covers the cost of health care generally not covered by Medicare, Medicaid or health insurance. In-home care, assisted living and adult day care are among the list of services covered by long-term care insurance.
specialized doctor visits
How does long-term care insurance protect your retirement savings?
You won't have to spend your savings on daily nursing care in your home.
You won't have to spend your savings on adult day care.
Long-term care insurance will prevent you from spending your retirement savings on unexpected, long-term health care costs, such as daily nursing visits to your home or adult day care.
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