CSS Financial Planning & Retirement Solutions 3 — Questions and Answers
Question 1: A widow age 60 wants to know when she can receive survivor benefits on her deceased spouse's Social Security record. What is the minimum age?
- 50 (if disabled)
- 60 (standard minimum) (Correct answer)
- 62
- 65
Correct answer: 60 (standard minimum)
A surviving spouse can begin collecting Social Security survivor benefits as early as age 60, or age 50 if disabled.
Question 2: Which type of annuity pays a guaranteed income for the life of the annuitant AND a second person, with payments continuing until both have died?
- Period certain annuity
- Life-only annuity
- Joint and survivor annuity (Correct answer)
- Variable annuity with GLWB
Correct answer: Joint and survivor annuity
A joint and survivor annuity provides income for the lifetimes of two people, typically spouses, and is commonly offered as a pension payout option.
Question 3: What is the 'four percent rule' in retirement income planning?
- Withdraw 4% of each year's portfolio value to adjust for market gains
- Withdraw 4% of the initial portfolio in year one, then adjust for inflation, to target a 30-year income period (Correct answer)
- Invest 4% of income into equities during retirement
- Keep 4% of assets in cash reserves at all times
Correct answer: Withdraw 4% of the initial portfolio in year one, then adjust for inflation, to target a 30-year income period
The 4% rule, derived from the Trinity Study, suggests withdrawing 4% of the initial portfolio value in the first year of retirement and adjusting for inflation annually to sustain withdrawals for 30 years.
Question 4: Which account type allows a disabled individual to save money without affecting eligibility for government benefits like SSI and Medicaid?
- Special Needs Trust
- ABLE Account (529A) (Correct answer)
- Health Savings Account (HSA)
- Roth IRA
Correct answer: ABLE Account (529A)
ABLE accounts (Achieving a Better Life Experience, IRC §529A) allow individuals with disabilities to save up to a certain limit annually without jeopardizing eligibility for means-tested benefits.
Question 5: When evaluating a defined benefit pension, which option typically provides the HIGHEST monthly payment to the retiree but NO protection for a surviving spouse?
- 50% joint and survivor
- 100% joint and survivor
- Life-only (single life annuity) (Correct answer)
- Period certain 10-year option
Correct answer: Life-only (single life annuity)
The life-only or single life annuity option pays the maximum monthly benefit because it stops at the retiree's death with no survivor benefit.
Question 6: A client aged 73 has a traditional IRA worth $500,000. The IRS Uniform Lifetime Table factor for age 73 is 26.5. What is the approximate RMD?
- $13,333
- $18,868 (Correct answer)
- $25,000
- $16,667
Correct answer: $18,868
RMD = Account balance ÷ Distribution period = $500,000 ÷ 26.5 ≈ $18,868.
Question 7: Which Medicare supplement (Medigap) plan is typically considered the most comprehensive, covering nearly all cost-sharing gaps including Part A and Part B coinsurance?
- Plan A
- Plan G (Correct answer)
- Plan K
- Plan L
Correct answer: Plan G
Medigap Plan G is currently the most comprehensive standardized plan available to new Medicare enrollees, covering Part A and B coinsurance, hospital costs, skilled nursing coinsurance, and foreign travel emergencies.
CSS Financial Planning & Retirement Solutions 3
A widow age 60 wants to know when she can receive survivor benefits on her deceased spouse's Social Security record.
What is the minimum age?