CSS Investment Strategies for Seniors 2

Question 1

What is the main benefit of dividend-paying stocks in a senior's portfolio?

Accepted Answer

A regular income stream that can supplement other retirement income

Answer

Dividend-paying stocks provide a recurring income stream that can supplement Social Security, pensions, or other retirement income without requiring asset sales.

Question 2

Which asset allocation strategy automatically adjusts the equity/bond mix to become more conservative as the investor ages?

Accepted Answer

Glide path / target-date fund approach

Answer

A glide path gradually shifts the portfolio from higher-equity (growth) to higher-fixed-income (preservation) allocations as the investor approaches and enters retirement.

Question 3

What is 'sequence of returns risk' and when is it most dangerous?

Accepted Answer

The risk that poor early returns, combined with ongoing withdrawals, permanently deplete the portfolio; most dangerous in early retirement

Answer

Sequence of returns risk is most damaging in the early retirement years when large withdrawals combined with market declines lock in losses before a recovery can help.

Question 4

What is a Qualified Longevity Annuity Contract (QLAC)?

Accepted Answer

A deferred income annuity purchased within a retirement account that begins payments at an advanced age and reduces RMDs

Answer

A QLAC is a deferred income annuity purchased within a qualified retirement account that begins income at a later age (up to 85), reducing the account balance subject to RMDs.

Question 5

What is the primary purpose of Treasury Inflation-Protected Securities (TIPS) in a senior's portfolio?

Accepted Answer

To protect purchasing power against inflation since principal adjusts with CPI

Answer

TIPS principal is adjusted based on the Consumer Price Index (CPI), protecting the investor's purchasing power against inflation, which is a key retiree concern.

(CSS) Certified Senior Specialist Practice Test

(CSS) Certified Senior Specialist Practice Test

CSS Investment Strategies for Seniors 2