Choose wisely. There is only one correct answer to each question.
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1.
To find out how long you will be using your retirement portfolio, you need to ______.
Subtract your expected retirement age from your life expectancy. This is the simplest way to do it.
2.
What do changing healthcare costs, vacation costs, and other expenses mean for your portfolio's withdrawal rate after you retire?
You will likely need to adjust it. Some expenses will drop, while others will rise. While one cannot say with certainty, this is the probable outcome.
3.
To add up the value of your retirement portfolio so that you can determine how much to spend each year, you should include _______.
All taxable and tax-deferred accounts. You should ideally include all from both types, since this is when you will be using up your money.
4.
If you aren't satisfied with your withdrawal rate from your portfolio, what can you do?
Accept a lower confidence level. You can also put off retirement or adjust your asset mix to possibly increase your withdrawal rate.
5.
You want to withdraw 6% per year from your portfolio over the next 30 years, which you expect to return 8% per year. Will your portfolio last your lifetime?
Maybe--it depends on the actual returns you experience each year. The actual returns you experience each year in retirement make a huge difference in how much you can spend each year. Averages aren't enough.
6.
Many retirees have sources of income that are fixed, such as Social Security or pensions. How does inflation affect their purchasing power?
It depends on the source. Many sources of fixed income lose their purchasing power due to inflation. But some of them get adjusted annually for the rate of inflation, thus keeping abreast of it.
