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11. Franklin took your advice and waited until he was fully vested in his employer’s contributions before moving to his new job. Before he left, TTT’s HR department told Franklin they will roll over his 401K to an IRA. Franklin rolled his eyes at the HR manager because he had no idea what she meant. He told her to just send him a check for the balance. He plans to pay some bills and put the rest in his savings account. Explain what roll over means and why taking a distribution of that money is a bad idea. _ ______________________________________________________________________________ _ ______________________________________________________________________________ _ ______________________________________________________________________________ _ ______________________________________________________________________________ 12. The traditional triple-play sources for retirement income are pension, social security and personal savings . Explain to Franklin why these may not be reliable to fund his retirement. _ ______________________________________________________________________________ _ ______________________________________________________________________________ _ ______________________________________________________________________________ _ ______________________________________________________________________________ 13. Franklin is enjoying his new job. He immediately signed up for the 401K retirement plan. The employer has a generous matching contribution. He thinks that, because he was 100% vested in his TTT plan he is 100% vested in the new employer’s plan . Could this be true? _ ______________________________________________________________________________ _ ______________________________________________________________________________ _ ______________________________________________________________________________ _ ______________________________________________________________________________ 14. Go to bankrate.com 401K Retirement Calculator. Franklin is now 35 years old. His salary is $58,000, which he expects to increase every year by 2%. He plans to contribute 10% of his salary to his 401K every year. Currently, he has $38,000 in his retirement account. His contributions are matched by his employer up to 50%. He expects his 401K account to earn at a rate of 7%. He wants to retire when he’s 65. How much will he have in his 401K? What if he works until he’s 70? _ ______________________________________________________________________________ _ ______________________________________________________________________________ PRODUCT PREVIEW
Chapter 10 | Your Risky Retirement 188
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