Choose wisely. There is only one correct answer to each question.
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1.
How do most retirees cover their expenses?
With a combination of their investments and fixed sources of income. The more fixed sources of income you have, the lower your withdrawal rate can be.
2.
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.
3.
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.
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.
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.
6.
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.