Designing Retirement Income Streams Flashcards
7 cards from real CRPC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Designing Retirement Income Streams flashcards as text
A retiree wants to maximize guaranteed lifetime income but also leave assets to heirs. Which annuity feature best balances these goals?
Answer: Life with period-certain annuity
A life with period-certain annuity guarantees payments for life while ensuring a minimum payout period to beneficiaries if the annuitant dies early.
Which withdrawal sequencing strategy typically minimizes a retiree's overall tax burden over a long retirement?
Answer: Withdraw from taxable accounts first, then tax-deferred, then Roth
Withdrawing from taxable accounts first allows tax-deferred and Roth accounts to continue growing, generally producing lower lifetime taxes.
A 70-year-old client is concerned about outliving assets. Which strategy directly addresses longevity risk by providing income starting at advanced age?
Answer: Deferred income annuity (longevity annuity) starting at age 85
A deferred income annuity (longevity annuity) begins payments at a future advanced age, insuring specifically against outliving other assets.
Under the IRS rules, what is the primary purpose of Required Minimum Distributions (RMDs) from traditional IRAs?
Answer: To ensure tax-deferred money is eventually taxed as ordinary income
RMDs force distributions from tax-deferred accounts so the government can collect income taxes on previously untaxed contributions and earnings.
When applying the 'flooring' retirement income approach, which assets are typically used to create the income floor?
Answer: Social Security, pensions, and annuities
The flooring approach uses guaranteed income sources like Social Security, pensions, and annuities to cover essential non-discretionary expenses.
A client receives $2,400/month from Social Security and $1,800/month from a pension. Their essential expenses are $3,800/month. What is their income surplus or gap?
Answer: $400 surplus
$2,400 + $1,800 = $4,200 guaranteed income minus $3,800 essential expenses leaves a $400 monthly surplus.
Which of the following best describes the 'bucket strategy' in retirement income planning?
Answer: Dividing assets into short-term liquid, medium-term balanced, and long-term growth buckets
The bucket strategy segments assets by time horizon: liquid assets for near-term needs, balanced assets for mid-term, and growth assets for long-term spending.