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.
Imagine that you just retired. If your living expenses are $30,000 a year now, how much will you need to maintain your current standard of living 20 years from now?
More than $30,000. Because of inflation, it is a good chance you will need much more in 20 years to maintain your current lifestyle.
3.
The government has done its part to help you save for retirement by _______.
Allowing you to set up tax-deferred retirement accounts. Accounts such as 401(k) plans and individual retirement accounts (IRAs) grow tax-deferred.
4.
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.
5.
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.