Retirement Needs Analysis 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 Needs Analysis flashcards as text
A CRPC practitioner uses a 'bottom-up' budget approach for retirement needs analysis. This involves:
Answer: Itemizing each anticipated expense category in retirement
The bottom-up approach builds a retirement budget by detailing each individual expense category rather than applying a broad income percentage.
How does delaying Social Security from age 67 to age 70 affect a retiree's benefit?
Answer: Benefit increases by 8% per year
Delayed retirement credits increase the Social Security benefit by 8% per year for each year claimed after full retirement age up to age 70.
In a retirement needs analysis, 'core' expenses are best described as:
Answer: Non-discretionary costs like housing, food, and healthcare
Core expenses are essential, non-discretionary costs that must be funded regardless of market conditions or personal choice.
Which of the following best explains why a 70% income replacement ratio may be insufficient for some retirees?
Answer: Some retirees travel extensively or have high healthcare costs
Individual spending patterns vary widely; clients with high travel, healthcare, or lifestyle aspirations may need 90–100% or more of pre-retirement income.
A client plans to fund retirement with both a 401(k) and a Roth IRA. Which tax planning advantage does the Roth IRA specifically provide in retirement?
Answer: Qualified withdrawals are tax-free, providing tax diversification
Roth IRA qualified withdrawals are income-tax-free, allowing retirees to manage taxable income levels and reduce tax burden on other sources.
A client is concerned about outliving her assets. Which strategy most directly addresses longevity risk?
Answer: Purchasing a life annuity to guarantee income for life
A life annuity provides guaranteed income payments for the annuitant's lifetime, directly eliminating the risk of outliving assets.
When assessing a client's retirement readiness, which ratio compares projected retirement income from all sources to projected retirement expenses?
Answer: Income coverage ratio
The income coverage ratio measures whether total projected retirement income (Social Security, pension, portfolio withdrawals) covers total retirement expenses.