Choose wisely. There is only one correct answer to each question.
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1.
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.
2.
Once you have multiplied your withdrawal rate factor by your total investable assets for retirement, let's say you come up with $35,000. This will be the amount you can spend each year of your retirement.
False. Given that you must adjust for inflation each year, the $35,000 would be good for your first year only.
3.
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.
4.
If you aren't satisfied with your withdrawal rate from your portfolio, you can _______.
Any of the above. Any of these options -- or more than one of them -- would help you get more satisfaction.
5.
If you expect your portfolio to return X% per year between now and retirement, and you decide to withdraw less than X%, you might run out of money before retirement.
True. You actually might if there is a bear market at certain points in your time horizon. That's why actual returns are what matter, rather than expected averages.
6.
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.