Retirement Income and Management 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 Retirement Income and Management flashcards as text
What distinguishes a 'defined benefit' pension plan from a 'defined contribution' plan in terms of retirement income certainty?
Answer: Defined benefit plans guarantee a specific monthly benefit; defined contribution plans have uncertain outcomes based on investment performance
Defined benefit plans promise a specific monthly income based on a formula, while defined contribution plans accumulate assets whose income potential depends on investment returns.
What is 'Medigap' (Medicare Supplement Insurance) designed to do?
Answer: Cover costs not paid by Original Medicare such as copays, coinsurance, and deductibles
Medigap policies fill the gaps in Original Medicare coverage by paying cost-sharing amounts that beneficiaries would otherwise owe.
A retiree implements a 'rising equity glidepath' strategy. What does this involve?
Answer: Starting retirement with a conservative allocation that gradually becomes more equity-heavy over time
A rising equity glidepath begins conservatively to protect against early sequence risk, then shifts toward equities as the retiree ages and the remaining time horizon changes.
Which form of Social Security benefit can a non-working spouse receive, and what is its maximum amount relative to the worker's benefit?
Answer: Spousal benefit equal to up to 50% of the worker's full retirement age benefit
A spouse who did not work can claim a spousal benefit worth up to 50% of the working spouse's primary insurance amount (PIA) at full retirement age.
What is the main risk associated with relying heavily on a single-premium immediate annuity (SPIA) for retirement income?
Answer: The lump sum is irrevocably committed and there is no liquidity for large unexpected expenses
Once a SPIA is purchased, the premium is converted to an income stream and is no longer available as a liquid asset for emergencies.
In retirement tax planning, what is the primary benefit of a Roth conversion ladder strategy?
Answer: It converts pre-tax funds to Roth over time to reduce future RMDs and taxable income in retirement
Systematically converting traditional IRA funds to Roth reduces future required minimum distributions and creates tax-free income later in retirement.
A retiree wants to use a variable annuity with a guaranteed lifetime withdrawal benefit (GLWB) rider. What does the GLWB primarily provide?
Answer: A guarantee that income withdrawals will continue for life even if the account value drops to zero
The GLWB rider guarantees a specified annual withdrawal amount for the annuitant's lifetime, regardless of how the underlying investments perform.