CMPS Retirement and Long-Term Planning 2

Question 1

A 62-year-old client wants to use a reverse mortgage to supplement retirement income. Which statement about Home Equity Conversion Mortgages (HECMs) is accurate?

Accepted Answer

The loan becomes due when the borrower sells, moves out, or dies

Answer

The borrower must vacate the home within 12 months of origination

Answer

HECMs require monthly principal and interest payments

Answer

The FHA guarantees repayment to the borrower, not the lender

Question 2

Which retirement account allows contributions even after age 72 if the owner is still working, with no required minimum distributions during the owner's lifetime?

Accepted Answer

Roth IRA

Answer

Traditional IRA

Answer

SEP-IRA

Answer

SIMPLE IRA

Question 3

A mortgage planner's client plans to retire in 10 years. How does delaying Social Security benefits from age 62 to age 70 affect the monthly benefit?

Accepted Answer

Benefits increase approximately 8% per year from full retirement age to 70

Answer

Benefits increase approximately 3% per year of delay

Answer

Benefits double from age 62 to age 70

Answer

Benefits increase only if the client continues to work

Question 4

When a client uses a cash-out refinance to fund retirement savings, which tax consideration is most important to address?

Accepted Answer

Mortgage interest deduction may be limited if proceeds are not used for home improvement

Answer

Cash-out proceeds are treated as ordinary income in the year received

Answer

The refinanced loan balance must be reported as a capital gain

Answer

Mortgage insurance premiums on the new loan are always deductible

Question 5

A 68-year-old retiree has a $400,000 mortgage balance and $600,000 in a Traditional IRA. Which strategy best balances liquidity and tax efficiency?

Accepted Answer

Use annual IRA distributions strategically to pay down the mortgage while managing tax brackets

Answer

Withdraw all IRA funds immediately to pay off the mortgage

Answer

Convert the entire IRA to a Roth IRA in one year

Answer

Stop making mortgage payments and let equity grow

Question 6

Which Medicare enrollment scenario would result in a late enrollment penalty?

Accepted Answer

Enrolling in Part B at age 67 after leaving employer coverage at age 65

Answer

Enrolling in Part B at age 65 while still covered by an employer group plan with 25 employees

Answer

Enrolling in Part A at age 65 while receiving Social Security benefits

Answer

Enrolling in Part D during the initial enrollment period

Question 7

In the context of long-term retirement planning, what does the '4% rule' refer to?

Accepted Answer

A safe initial annual withdrawal rate from a retirement portfolio designed to last 30 years

Answer

The recommended mortgage-to-retirement-savings ratio

Answer

The maximum allowable IRA contribution as a percentage of income

Answer

The average annual return assumption used in retirement projections