Retirement Planning for Financial Advisors Flashcards
6 cards from real Financial Advisor practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Retirement Planning for Financial Advisors flashcards as text
In a defined benefit pension plan, the retirement benefit is primarily based on:
Answer: Years of service and final salary
Defined benefit plans promise a specific monthly benefit at retirement, typically calculated using a formula based on years of service and final average salary.
The 4% withdrawal rule for retirement income planning suggests that:
Answer: Withdrawing 4% of the initial portfolio value annually has historically sustained a 30-year retirement
The 4% rule, derived from the 'Trinity Study,' suggests that withdrawing 4% of the initial portfolio annually (adjusted for inflation) has a high probability of lasting 30 years.
A 403(b) retirement plan is primarily available to employees of:
Answer: Public schools and non-profit organizations
403(b) plans are tax-advantaged retirement plans available to employees of public schools, non-profits, churches, and certain other tax-exempt organizations.
What is the 'sequence of returns' risk in retirement planning?
Answer: The danger that poor returns early in retirement can permanently impair portfolio longevity
Sequence of returns risk refers to the danger that negative portfolio returns occurring early in retirement, combined with withdrawals, can permanently deplete a portfolio faster than average returns would predict.
Under ERISA, what does 'vesting' refer to in a company-sponsored retirement plan?
Answer: The employee's ownership rights to employer contributions over time
Vesting refers to the process by which an employee gains non-forfeitable ownership rights to employer contributions based on years of service.
Which Social Security filing strategy, now restricted by the Bipartisan Budget Act of 2015, allowed one spouse to collect spousal benefits while deferring their own benefit?
Answer: Restricted application strategy
The restricted application strategy allowed a spouse to collect only spousal benefits while letting their own benefit grow, but it was largely eliminated for those born after January 1, 1954.