CRC Retirement Planning 2

Question 1

A client retires at age 62 and begins Social Security benefits. Compared to waiting until full retirement age (FRA), their benefit will be permanently reduced by approximately how much per year early?

Accepted Answer

6.67%

Answer

Benefits are reduced by 6.67% per year (5/9 of 1% per month) for the first three years before FRA.

Question 2

Which of the following best describes the 'sequence of returns' risk in retirement?

Accepted Answer

The risk that poor investment returns early in retirement disproportionately deplete the portfolio

Answer

Sequence of returns risk refers to the danger that early negative returns, combined with withdrawals, can permanently impair a retirement portfolio even if long-run averages are acceptable.

Question 3

A Roth IRA conversion is most advantageous when the account holder expects their tax rate in retirement to be:

Accepted Answer

Higher than their current tax rate

Answer

Converting to a Roth makes most sense when future tax rates are expected to be higher, because taxes are paid now at the lower rate.

Question 4

Under the SECURE 2.0 Act, the required beginning date for RMDs from traditional IRAs for individuals born in 1951 or later is April 1 following the year they turn:

Accepted Answer

73

Answer

SECURE 2.0 raised the RMD starting age to 73 for individuals born between 1951 and 1959.

Question 5

Which withdrawal strategy is designed to keep a retiree's portfolio balanced by withdrawing proportionally from each asset class?

Accepted Answer

Proportional withdrawals

Answer

Proportional withdrawals maintain asset allocation by drawing from all asset classes in proportion to their current portfolio weights.

(CRC) Certified Retirement Counselor Practice Test

(CRC) Certified Retirement Counselor Practice Test

CRC Retirement Planning 2