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1.
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.
2.
When calculating your future retirement income needs, you must consider inflation.
True. After you have adjusted for inflation, you will have a true picture of the amount of income available for living purposes.
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.
People who retire early have less time to get their finances together than those who retire at normal retirement age do, and will likely need more money to fund their retirement.
True. This is because they will have to fund their retirement over more years than a person who retires at an older age.
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.