2020 RETIREMENT INCOME LITERACY SURVEY (2024)

Score: 54.1%

20/37 points

Page 1/3

Question Title

1. Choose the response below that best completes this statement:
If you had a well-diversified portfolio of 50% stocks and 50% bonds that was worth $100,000 at retirement, based on historical returns in the United States, the most you can afford to withdraw each year is about ____ plus inflation each year to have a 95% chance that your assets will last for 30 years.

$2,000

$4,000

$6,000

$8,000

I don’t know

0/1 point

Question Title

2. Choose the response below that best completes this statement:
To maximize the safe withdrawal rate from a portfolio over a 30-year retirement period, it is best to hold ___ in equities throughout retirement.

0-10%

25-35%

50-60%

90-100%

I don’t know

0/1 point

Question Title

3. True or false: Taking a portion (20-40%) of a retirement portfolio and buying a life annuity can protect against the uncertainty of life expectancy, ensuring that a basic level of spending is available throughout retirement.

True

False

I don't know

0/1 point

Question Title

4. A 25% negative single year return in a retirement portfolio would have the biggest impact on long-term retirement security if it occurs:

15 years prior to retirement

At retirement

15 years after retirement begins

The timing doesn’t matter

I don’t know

0/1 point

Question Title

5. Which of the following strategies is least likely to improve retirement security?

Saving an additional 3% of salary in the five years prior to retirement

Working for two years past the planned retirement date

Deferring Social Security benefits for two years longer than 25originally planned

I don’t know

0/1 point

Question Title

6. A 65-year-old man has an average life expectancy of approximately an additional:

10 years

15 years

20 years

25 years

I don’t know

1/1 point

Question Title

7. Which one of the following is true about cash value life insurance?

The cash value portion will accumulate tax deferred.

You typically cannot borrow from the cash value

The policy will expire after a specified period of time

The policy will typically cost less than a term insurance policy.

I don’t know

0/1 point

Question Title

8. True or false: The death benefit from a life insurance policy owned by an individual is income tax free for the beneficiary.

True

False

I don't know

1/1 point

Question Title

10. An immediate income annuity that pays income of $1,000 a month is generally going to be more expensive…

The younger the owner is when the annuity begins

For a man rather than for a woman

If interest rates rise

For a single person than for a couple

I don’t know

Question Title

11. A deferred variable annuity with guaranteed lifetime withdrawal benefits…

Ensures that the investment account will not lose value

Only offers investment alternatives with fixed returns

Pays guaranteed income that varies based on market performance

Can pay income even if the investment account goes to zero

I don’t know

0/1 point

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Question Title

12. Although a minimum distribution will not be required in 2020, distributions from an IRA generally must be made every year once an individual has attained age…

59 1/2

70 1/2

I don’t know

1/1 point

Question Title

13. Which one of the following statements concerning the federal income tax treatment of distributions to a 65-year-old retiree is true?

Distributions from a Roth IRA are generally tax-free

Distributions from a traditional IRA are generally taxed as long-term capital gains

Distributions from a traditional IRA for the 65-year-old are generally subject to an additional 10% penalty tax

I don’t know

1/1 point

Question Title

14. True or false: A retiree who is working part-time can generally continue to contribute to an IRA or Roth IRA.

True

False

I don't know

1/1 point

Question Title

15. Converting a portion of a traditional IRA into a Roth IRA is a good idea this year if…

You have more taxable income than usual and your marginal tax rate is higher than normal

You have a big tax deduction this year and your marginal tax rate is lower than normal

The value of the assets in your IRA have remained the same for 10 years

I don’t know

1/1 point

Question Title

16. Suppose that the interest rate on your savings account was 2% per year and inflation was 4% per year. After one year, would you be able to buy more than, exactly the same as, or less than today with the money in this account?

More than today

Exactly the same as today

Less than today

I don't know

1/1 point

Question Title

17. Of the following options, the best way to protect against inflation is to have a…

Diversified portfolio of stocks

Diversified portfolio of traditional bonds

Diversified portfolio of CDs (certificates of deposit)

I don’t know

0/1 point

Question Title

18. Sarah is single, age 65, and takes a reverse mortgage with a lump sum payment. When does the loan have to be repaid?

When she attains age 75

When she takes on any other loan

When she permanently leaves the home

Whenever the mortgage company wants it back

I don't know

1/1 point

Question Title

19. Continuing care retirement communities (CCRCs) are different than a 55-plus housing development in that CCRCs always offer…

A range of care from independent living to nursing care

The opportunity to participate in social events

The opportunity to have relatives move onto facility grounds

I don't know

1/1 point

Question Title

20. Traditional Medicare will cover which of the following medical expenses?

Routine dental care

Physical exams

Hearing aids

All of the above

I don't know

Question Title

21. True or false: Medicare supplement insurance policies are most commonly purchased to cover the deductibles and copays that are charged under Medicare Parts A and B.

True

False

I don't know

1/1 point

Question Title

22. True or false: The total out of pocket medical costs for married couples in retirement is relatively consistent from retiree to retiree.

True

False

I don't know

1/1 point

Question Title

23. What is the proportion of the population that is going to need assistance with activities of daily living (need long-term care) at some point?

10%

25%

50%

70%

I don’t know

1/1 point

Question Title

24. Nationally, who pays for the majority of long-term care expenses provided in nursing homes?

Medicare

Private payment by individuals

Medicaid

Insurance purchased by individuals

I don't know

1/1 point

Question Title

25. Nationally, who provides the majority of long-term care services?

Family members

Nursing homes

Assisted living facilities

Hospitals

I don't know

1/1 point

Question Title

26. Long-term care insurance is intended to cover…

Hospital expenses after surgery

Emergency room care

Alzheimer’s care

All of the above

I don't know

0/1 point

Question Title

27. True or false:Medicare typically pays for the costs of a nursing home for the first year.

True

False

I don't know

0/1 point

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Question Title

28. True or false: Buying a single company’s stock usually provides a safer return than a stock mutual fund.

True

False

I don't know

1/1 point

Question Title

29. If 100% of a mutual fund’s assets are invested in long-term bonds and the investment climate changes so that interest rates rise significantly, then the value of the mutual fund shares…

Increase significantly

Decrease significantly

Will not change at all

May rise or fall depending upon the type of bond

I don't know

0/1 point

Question Title

30. Historically, which one of the following generates the highest returns over a long time period?

Small company stock funds

Large company stock funds

Dividend paying stock funds

High yield bond funds

I don't know

0/1 point

Question Title

31. True or false: Exchange traded funds generally have higher expenses than actively managed mutual funds.

True

False

I don't know

0/1 point

Question Title

32. A PE ratio means…

Profits to expense

Price to earnings

Par value to earnings

Price to expense

I don't know

0/1 point

Question Title

33. Which of the following types of long-term bonds typically has the highest yield?

AAA rate corporate bonds

B-rated corporate bonds

Treasury bonds

I don't know

0/1 point

Question Title

34. A single person who is likely to live to age 90 is generally going to be better off claiming Social Security benefits at age…

I don’t know

1/1 point

Question Title

35. Social Security workers’ monthly benefits are increased for each year that benefits are deferred from age 62 to age…

I don’t know

1/1 point

Question Title

36. Please choose the response below that best completes this statement:
According to the Social Security Administration, around 2033 they will only have funds to pay for approximately ___ of promised benefits.

25%

50%

75%

Idon't know

1/1 point

Question Title

37. If a participant is given the choice of a lump sum or a life annuity from a company sponsored 401(k) retirement plan, the life annuity is likely to be the better choice if the participant is most concerned about…

Leaving money to children

Having enough money to meet basic expenses

Having flexibility to meet changing income needs

Getting an increasing stream of income over retirement

I don't know

0/1 point

Question Title

38. If a large public company sponsoring a 401(k) plan files for bankruptcy, employees are…

At risk of losing their 401(k) benefits because trust assets will pay creditors first

At no risk of losing their 401(k) benefits because the plan is outside the claims of creditors

Only at risk of losing their 401(k) benefits if the plan document says the creditors have the right to trust assets

Only at risk of losing their 401(k) benefits if a judge decides that the creditors should be paid first

0/1 point

Done

2020 RETIREMENT INCOME LITERACY SURVEY (2024)

Question Title

Question Title

2. Choose the response below that best completes this statement: To maximize the safe withdrawal rate from a portfolio over a 30-year retirement period, it is best to hold ___ in equities throughout retirement.

Question Title

3. True or false: Taking a portion (20-40%) of a retirement portfolio and buying a life annuity can protect against the uncertainty of life expectancy, ensuring that a basic level of spending is available throughout retirement.

Question Title

4. A 25% negative single year return in a retirement portfolio would have the biggest impact on long-term retirement security if it occurs:

Question Title

5. Which of the following strategies is least likely to improve retirement security?

Question Title

6. A 65-year-old man has an average life expectancy of approximately an additional:

Question Title

7. Which one of the following is true about cash value life insurance?

Question Title

8. True or false: The death benefit from a life insurance policy owned by an individual is income tax free for the beneficiary.

Question Title

10. An immediate income annuity that pays income of $1,000 a month is generally going to be more expensive…

Question Title

11. A deferred variable annuity with guaranteed lifetime withdrawal benefits…

Question Title

12. Although a minimum distribution will not be required in 2020, distributions from an IRA generally must be made every year once an individual has attained age…

Question Title

13. Which one of the following statements concerning the federal income tax treatment of distributions to a 65-year-old retiree is true?

Question Title

14. True or false: A retiree who is working part-time can generally continue to contribute to an IRA or Roth IRA.

Question Title

15. Converting a portion of a traditional IRA into a Roth IRA is a good idea this year if…

Question Title

16. Suppose that the interest rate on your savings account was 2% per year and inflation was 4% per year. After one year, would you be able to buy more than, exactly the same as, or less than today with the money in this account?

Question Title

17. Of the following options, the best way to protect against inflation is to have a…

Question Title

18. Sarah is single, age 65, and takes a reverse mortgage with a lump sum payment. When does the loan have to be repaid?

Question Title

19. Continuing care retirement communities (CCRCs) are different than a 55-plus housing development in that CCRCs always offer…

Question Title

20. Traditional Medicare will cover which of the following medical expenses?

Question Title

21. True or false: Medicare supplement insurance policies are most commonly purchased to cover the deductibles and copays that are charged under Medicare Parts A and B.

Question Title

22. True or false: The total out of pocket medical costs for married couples in retirement is relatively consistent from retiree to retiree.

Question Title

23. What is the proportion of the population that is going to need assistance with activities of daily living (need long-term care) at some point?

Question Title

24. Nationally, who pays for the majority of long-term care expenses provided in nursing homes?

Question Title

25. Nationally, who provides the majority of long-term care services?

Question Title

26. Long-term care insurance is intended to cover…

Question Title

27. True or false:Medicare typically pays for the costs of a nursing home for the first year.

Question Title

28. True or false: Buying a single company’s stock usually provides a safer return than a stock mutual fund.

Question Title

29. If 100% of a mutual fund’s assets are invested in long-term bonds and the investment climate changes so that interest rates rise significantly, then the value of the mutual fund shares…

Question Title

30. Historically, which one of the following generates the highest returns over a long time period?

Question Title

31. True or false: Exchange traded funds generally have higher expenses than actively managed mutual funds.

Question Title

32. A PE ratio means…

Question Title

33. Which of the following types of long-term bonds typically has the highest yield?

Question Title

34. A single person who is likely to live to age 90 is generally going to be better off claiming Social Security benefits at age…

Question Title

35. Social Security workers’ monthly benefits are increased for each year that benefits are deferred from age 62 to age…

Question Title

36. Please choose the response below that best completes this statement:According to the Social Security Administration, around 2033 they will only have funds to pay for approximately ___ of promised benefits.

Question Title

37. If a participant is given the choice of a lump sum or a life annuity from a company sponsored 401(k) retirement plan, the life annuity is likely to be the better choice if the participant is most concerned about…

Question Title

38. If a large public company sponsoring a 401(k) plan files for bankruptcy, employees are…

2. Choose the response below that best completes this statement:
To maximize the safe withdrawal rate from a portfolio over a 30-year retirement period, it is best to hold ___ in equities throughout retirement.

36. Please choose the response below that best completes this statement:
According to the Social Security Administration, around 2033 they will only have funds to pay for approximately ___ of promised benefits.