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Unit 5 Retirement TEST

Last updated almost 5 years ago

11 questions

Note from the author:

Financial Literacy

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Question 1

1.

Ethan is 48 years old. He is planning on retiring when he turns 62. He has opened an IRA with an APR of 2.95% compounded monthly. If he makes monthly deposits of $850 to the account, how much will he have in the account when he is ready to retire?

Question 2

2.

Beth worked for a company that calculates a pension that is based on the average of the highest 5 years, number of years of service, and a 2% multiplier. Her highest 5 years were $ 83,612 $ 82,893 $ 88,475 $ 85,873 $ 83,738. She worked for the company for 31 years. Calculate Beth’s Annual Pension.

Question 3

3.

Gillian started a retirement account with $10,000 when she turned 35. The account compounds interest quarterly at a rate of 3.625%. She made no further deposits into the account. After 20 years, she decided to withdraw 40% of what had accumulated in the account so that she could make her home handicap accessible. She had to pay a 10% penalty on the early withdrawal. What was her penalty?

Use the following for 4 and 5.  In 2009, the maximum taxable income for Social Security was $106,800 with a 6.2% tax rate.

Question 4

4.

What is the maximum anyone could have paid into Social Security tax in the year 2009?

Question 5

5.

Ravi had two jobs in 2009. One employer paid him $59,810 and the other paid him $61,200. Each employer took out 6.2% for Social Security. Does Ravi overpay in Social Security, if so by how much?

Question 6

6.

Use the chart for numbers 7-10

Question 7

7.

What is the life expectancy for a 65-year-old female?

Question 8

8.

Until what age is a 68-year-old male expected to live?

Question 9

9.

If the company insures 20,000 59-year-old males, how many are expected to die before their 60th birthday?

Question 10

10.

Based on the table, what is the probability that a 56-year-old female will live to her 57th birthday?

Question 11

11.

John has a universal life insurance policy with a face value of $250,000. The current cash value of the policy is $8,260. If the premium is $97 per month, for how many months can the cash value be used to pay the Premium?