RAA Retirement Planning & Income Strategies 3

Question 1

A 68-year-old client has a pension, Social Security, and a large IRA. Which asset should typically be drawn down LAST to maximize tax-deferred growth?

Accepted Answer

Roth IRA

Answer

Roth IRAs have no RMDs and grow tax-free, so drawing them last preserves the most after-tax wealth over time.

Question 2

The primary purpose of a deferred income annuity (DIA) purchased at age 65 with payments beginning at age 85 is to:

Accepted Answer

Hedge against longevity risk in advanced old age

Answer

A DIA (also called longevity insurance) is designed to provide guaranteed income if the annuitant lives to an advanced age, protecting against outliving other assets.

Question 3

Which retirement income strategy involves purchasing a series of bonds that mature in successive years to cover annual expenses?

Accepted Answer

Laddering

Answer

Bond laddering staggers maturity dates so that bonds mature annually, providing predictable cash flows to cover retirement expenses each year.

Question 4

A client asks about the 'floor and upside' retirement framework. The 'floor' component is typically funded by:

Accepted Answer

Guaranteed income sources like annuities, Social Security, and pensions

Answer

The floor represents non-negotiable baseline income needs and is funded by guaranteed sources so the client never falls below a minimum living standard.

Question 5

A reverse mortgage (HECM) can be used as a retirement income strategy primarily because it allows homeowners to:

Accepted Answer

Access home equity as tax-free income without selling the home

Answer

A HECM allows homeowners 62 or older to borrow against home equity, receiving proceeds that are generally not taxable income while retaining ownership.

(RAA) Registered Annuity Advisor Practice Test

(RAA) Registered Annuity Advisor Practice Test

RAA Retirement Planning & Income Strategies 3