AAMS Module 6 Practice Questions and Answers (100% Pass)
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Course
AAMS
Institution
AAMS
AAMS Module 6 Practice Questions and
Answers (100% Pass)
How are preretirement income replacement percentages used to assess a
client's retirement needs - Answer️️ -Typically households at most
income levels need 70% to 80% (although some advisers are currently
recommending up to 100% but ...
AAMS Module 6 Practice Questions and
Answers (100% Pass)
How are preretirement income replacement percentages used to assess a
client's retirement needs - Answer✔️✔️-Typically households at most
income levels need 70% to 80% (although some advisers are currently
recommending up to 100% but generally it is about 85%) of preretirement
income to maintain their standard of living during retirement. Studies
conducted during the last decade indicate that at higher income levels,
replacement percentages to be filled from the retiree's retirement plan and
individual savings increased from 57% to 68%, depending on marital
status. The client's own consumption patterns make the use of such
percentages only one of the factors to consider in assessing retirement
income needs.
How are the statistics about average annual expenditures compiled by the
Bureau of Labor Statistics used to assess a client's retirement income needs
- Answer✔️✔️-Average annual expenditure information compiled by the
BLS includes broad averages based on consumption patterns of people
from ages 35 to 64 and ages 65 and over. While these stats won't fit any
client precisely, they will help you understand how a person's financial life
may change when his or her working years end.
What is the effect of inflation on retirement period income needs? -
Answer✔️✔️-Inflation increases the number of dollars needed to pay for
retirement period needs. Inflation erodes the purchasing power of
retirement period income if that income does not grow at a rate that offsets
inflation.
Explain how some economists view the effect of inflation on a retired
person's income needs, focusing on the areas of housing and medical care -
Answer✔️✔️-Some economists believe that inflation's impact is less severe
on the elderly population than on the younger population. They reason
that housing, which is a major component of inflation measures, is largely
paid for prior to retirement, and that older people tend to sell their homes
at higher prices rather than purchase homes at higher prices. They also
note that medicare benefits, like social security old age benefits, are
adjusted with cost of living increases. However this ignores the fact that
Medicare deductibles and co payment amounts increase for the medicare
participant and that there are many coverage gaps in medicare. Most long
term care for example, is not covered by Medicare.
Three legged stool of retirement income - Answer✔️✔️-Social security,
employer-sponsored pension and profit sharing plans, and the individual's
accumulated investments.
Spousal benefits - Answer✔️✔️-While both are living the spouse of a social
security recipient is entitled to 50% of the recipient's retirement benefit,
subject to a family maximum, as long as the spouse is of ful retirement age.
Advantages of tax deferred retirement arrangements - Answer✔️✔️-Clients
can invest more within tax-deferred arrangements because the amount
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