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

A HECM becomes due and payable when the last surviving borrower sells the home, permanently moves out, or passes away.

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

Roth IRAs have no required minimum distributions during the original owner's lifetime and allow contributions as long as the owner has earned income.

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

Delayed retirement credits increase Social Security benefits by approximately 8% per year for each year delayed past full retirement age up to age 70.

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

Under current tax law, mortgage interest is only fully deductible on debt used to buy, build, or substantially improve the home; cash-out for other purposes may not qualify.

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

Systematic IRA withdrawals aligned with lower tax brackets minimize the tax burden while reducing mortgage debt over time.

(CMPS) Certified Mortgage Planning Specialist Practice Test

(CMPS) Certified Mortgage Planning Specialist Practice Test

CMPS Retirement and Long-Term Planning 2