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Financial Planning Courses: Retirement

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1.
Inflation risk, which is the risk that rising prices will erode your money's purchasing power, is a challenge for retired people because _______.
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They usually live on a fixed income. Fixed incomes don't change, so when prices rise, that affects the purchasing power of retired people's money.
2.
Why is it necessary to consider what inflation will do to your income?
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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.
3.
Social Security benefits are based on _______.
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Average lifetime earnings. Social Security benefits are based on average lifetime earnings and the amount of time you've worked.
4.
Who has the best chance of getting the most from growth and compounding of one's money?
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A 20-year-old. As a rule, the younger you are when you start saving for your retirement, the more you will gain from the growth and compounding of your money.
5.
Which retirement plan is paid for by taxes on your earnings as opposed to you making contributions to it?
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Social Security. Social Security is a national program that is paid for through special taxes on workers' earnings.