CFG Financial Planning for Older Adults 2 — Questions and Answers
Question 1: A 72-year-old client wants to delay Social Security benefits. What is the maximum age at which delayed retirement credits stop accruing?
- Age 68
- Age 70 (Correct answer)
- Age 72
- Age 75
Correct answer: Age 70
Delayed retirement credits stop accruing at age 70, so there is no financial benefit to delaying Social Security beyond that age.
Question 2: Which Medicare part covers outpatient prescription drugs for beneficiaries who choose to enroll?
- Medicare Part A
- Medicare Part B
- Medicare Part C
- Medicare Part D (Correct answer)
Correct answer: Medicare Part D
Medicare Part D provides outpatient prescription drug coverage through private insurance plans approved by Medicare.
Question 3: An older adult moves into an assisted living facility and needs to spend down assets for Medicaid eligibility. Which asset is generally considered exempt?
- Certificate of deposit
- Primary residence (if spouse still lives there) (Correct answer)
- Vacation home
- Investment brokerage account
Correct answer: Primary residence (if spouse still lives there)
A primary residence is generally exempt from Medicaid spend-down requirements when a community spouse continues to live in it.
Question 4: What is the primary purpose of a Qualified Longevity Annuity Contract (QLAC)?
- To provide immediate income at retirement
- To defer income and RMDs to advanced old age (Correct answer)
- To fund long-term care premiums
- To generate tax-free growth in a Roth account
Correct answer: To defer income and RMDs to advanced old age
A QLAC allows a portion of IRA funds to be used to purchase a deferred annuity that starts income at a later age, reducing RMDs in the meantime.
Question 5: Which of the following best describes the 'sequence of returns' risk in retirement?
- The risk that inflation will outpace investment returns over 30 years
- The risk that poor early-retirement returns permanently deplete a portfolio (Correct answer)
- The risk that annuity payments will not keep pace with medical costs
- The risk of outliving Social Security benefits
Correct answer: The risk that poor early-retirement returns permanently deplete a portfolio
Sequence of returns risk refers to the danger that negative returns early in retirement, combined with withdrawals, can permanently impair a portfolio even if long-term averages are acceptable.
Question 6: Under the Elder Justice Act, which federal agency has primary responsibility for coordinating elder abuse prevention efforts?
- Department of Justice
- Department of Health and Human Services (Correct answer)
- Consumer Financial Protection Bureau
- Social Security Administration
Correct answer: Department of Health and Human Services
The Elder Justice Act, enacted in 2010, placed the primary coordination role for elder abuse prevention with the Department of Health and Human Services.
Question 7: A client receives a pension with a 'joint and 50% survivor' option. What happens to the benefit if the client (the pensioner) dies first?
- The spouse receives 100% of the original pension amount
- The spouse receives 50% of the original pension amount (Correct answer)
- The pension payments stop entirely
- The spouse receives 75% of the original pension amount
Correct answer: The spouse receives 50% of the original pension amount
Under a joint and 50% survivor annuity, the surviving spouse receives 50% of the pension benefit that was being paid to the primary pensioner.
CFG Financial Planning for Older Adults 2
A 72-year-old client wants to delay Social Security benefits.
What is the maximum age at which delayed retirement credits stop accruing?