Course Quiz - Financial Fitness Center

1.

Why is it necessary to consider what inflation will do to your income?

Inflation increases the taxes that are taken out of your paychecks.

Inflation alters the dividends and interest that investments pay you.

The effects of inflation will require that you use more money to maintain your current standard of living.

It is not necessary to take inflation into account.

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.

If you live longer than expected, you may face a number of different risks associated with your elder years. Which risk refers specifically to living longer than expected?

Inflation risk

Longevity risk

Healthcare costs risk

Long-term care risk

Longevity risk. Longevity risk is the risk that you will live longer than is expected. It can lead to a lot of challenges if it is not planned for.

3.

Many retirement plans are tax-deferred. What does tax-deferred mean?

The earnings are taxed at the end of the year.

Nothing in the retirement plan is taxed, ever.

The earnings that build up in them are not taxed until you start making withdrawals.

None of the above

The earnings that build up in them are not taxed until you start making withdrawals. This enables your retirement plan to grow more every year.

4.

Long time horizons generally enable us to assume _______ short-term ones.

More risk than

Less risk than

The same risk as

More risk than. Time reduces risk.

5.

Social Security is a program that pays benefits for _______.

Healthcare needs

Retirement

Food

Retirement. Social Security is a retirement program.

Test your knowledge

Choose wisely. There is only one correct answer to each question.