Choose wisely. There is only one correct answer to each question.
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1.
What will likely happen to your spending rate during your retirement years?
It will likely change. Spending needs change in retirement, especially for healthcare. And some spending will likely drop -- on clothes, for example.
2.
Examples of fixed sources of income that you might be able to include in your retirement withdrawals are _______.
All of the above. These are all fixed sources, although some are adjusted for inflation.
3.
Your retirement time horizon will be how long your portfolio lasts before running out.
False. Your retirement time horizon will be how long you expect to draw on your portfolio, not how long it actually lasts.
4.
In terms of portfolio withdrawal, what does a 50% confidence level mean?
There's a 50% chance that your portfolio will expire before you do. For some, a 95% or 100% confidence level is crucial: You want your withdrawal rate to survive most worst-case scenarios. Others may accept a lower probability of success.
5.
Once you have multiplied your withdrawal rate factor by your total investable assets for retirement, the resulting number will be _______.
The amount you can spend your first year in retirement. Though the resulting number may look like the amount you can spend each year, you must remember to factor in inflation. Therefore, the number applies only to your first year. Thereafter, you would increase that withdrawal rate by the rate of inflation over the prior year.
6.
If you aren't satisfied with your withdrawal rate from your portfolio, you may need to put off retirement.
True. Though there are other options besides that, putting off retirement might be necessary.