Retirement Income Management Flashcards
7 cards from real CRC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Retirement Income Management flashcards as text
A client receives a pension with a 'joint and 50% survivor' option. What does this mean?
Answer: Upon the retiree's death, the surviving spouse receives 50% of the original pension payment
A joint and 50% survivor annuity pays the full benefit while the retiree is alive, then continues at 50% of that amount to the surviving spouse for the rest of their life.
Which concept describes the advantage of using tax-deferred accounts later in retirement to allow tax-free Roth accounts to grow?
Answer: Tax location optimization
Tax location optimization (or asset location) strategically places investments and manages withdrawals across account types to minimize lifetime taxes.
What is the COLA (Cost-of-Living Adjustment) for Social Security benefits based on?
Answer: The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W)
Social Security COLAs are calculated using the CPI-W, measured from the third quarter of the prior year to the third quarter of the current year.
A retiree uses a 'flooring strategy.' What distinguishes this approach from a total return approach?
Answer: It first secures guaranteed income to cover essential expenses, then invests the remainder for growth
The flooring strategy establishes a guaranteed income 'floor' covering essential expenses through annuities, Social Security, or bonds, then pursues growth with remaining assets.
At what age does the Social Security earnings test no longer apply to benefit recipients?
Answer: Full Retirement Age (FRA)
Once a recipient reaches their Full Retirement Age, the earnings test no longer applies and benefits are not reduced regardless of earned income.
Which distribution strategy involves withdrawing from taxable accounts first, then tax-deferred, then Roth accounts?
Answer: Conventional sequencing
Conventional sequencing depletes taxable accounts first, then tax-deferred accounts, and finally Roth accounts, allowing tax-advantaged growth to continue as long as possible.
What is a 'sustainable withdrawal rate' designed to balance?
Answer: Maximizing lifetime income against longevity risk
A sustainable withdrawal rate aims to provide sufficient income throughout retirement while managing the risk of depleting assets before death.