Choose wisely. There is only one correct answer to each question.
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1.
Why is it necessary to consider what inflation will do to your income?
The effects of inflation will require that you use more money to maintain your current standard of living. If you want to keep up your current level of comfort, you will need to assess the impact of inflation on your nest egg.
2.
Compounding helps your money grow quickly because ________.
It allows you to earn money on earned interest and on principal. The extra growth is made possible by the phenomenon of interest being earned on interest.
3.
Janice is 35 and wants to retire early at age 60. What is her best bet for having the money she'll need?
Her employer retirement savings plan and her savings account. If she wants to retire at 60, any plan that relies on Social Security is unwise, since she will not receive full benefits until her normal retirement age.
4.
To help save Social Security, we may have to _______.
All of the above. All of these options may be necessary.
5.
Over a long period, inflation reduces what a person with a fixed income can afford to buy.
True. Financial planners suggest that you begin saving for retirement as early as possible to offset the effects of inflation.