CRC Retirement Income Management 3

Question 1

A client receives a pension with a 'joint and 50% survivor' option. What does this mean?

Accepted Answer

Upon the retiree's death, the surviving spouse receives 50% of the original pension payment

Answer

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.

Question 2

Which concept describes the advantage of using tax-deferred accounts later in retirement to allow tax-free Roth accounts to grow?

Accepted Answer

Tax location optimization

Answer

Tax location optimization (or asset location) strategically places investments and manages withdrawals across account types to minimize lifetime taxes.

Question 3

What is the COLA (Cost-of-Living Adjustment) for Social Security benefits based on?

Accepted Answer

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W)

Answer

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.

Question 4

A retiree uses a 'flooring strategy.' What distinguishes this approach from a total return approach?

Accepted Answer

It first secures guaranteed income to cover essential expenses, then invests the remainder for growth

Answer

The flooring strategy establishes a guaranteed income 'floor' covering essential expenses through annuities, Social Security, or bonds, then pursues growth with remaining assets.

Question 5

At what age does the Social Security earnings test no longer apply to benefit recipients?

Accepted Answer

Full Retirement Age (FRA)

Answer

Once a recipient reaches their Full Retirement Age, the earnings test no longer applies and benefits are not reduced regardless of earned income.

(CRC) Certified Retirement Counselor Practice Test

(CRC) Certified Retirement Counselor Practice Test

CRC Retirement Income Management 3