Retirement Objective

(a) Select the CORRECT answer for the following statements:    (8 marks)
1. When additional savings are needed to meet one’s retirement objectives, the additional aggregate amount needed for one’s retirement fund should be based on which of the following?
A The present value at retirement of inflation-adjusted additional savings.
B The future value of inflation-adjusted additional savings.
C The present value of tax-adjusted additional savings.
D Available disposable income not otherwise committed.
2. The amount that must be saved annually for retirement would logically be reduced by
A The dissipation of savings and investment prior to retirement.
B A return on one’s investments greater than anticipated.
C An increase in the rate of inflation.
D An increase in one’s expected lifestyle upon retirement.

3. To calculate the future value of income-producing investments in the retirement planning calculations, the most CORRECT interest factor to use is the

A Marginal tax rate.
B Rate of return.
C Expected rate of inflation.
D Modified interest rate.

4. Which of the following statements concerning inflation is/are CORRECT?

I. Inflation affects the dollar amount of a person’s assets available at retirement.
II. Some retirement plans adjust benefits to take inflation into consideration.
A I only.
B II only.
C Both I and II.
D Neither I and II.

5. Which of the following are features of Supplementary Retirement Scheme?
I. It offers flexibility in the contribution amount and timing with tax deduction for contributions made.
II. Investment gains accumulated are tax-free but dividends earned are taxable at personal tax rate.
III. Contributions to SRS are not revocable and any premature withdrawal of SRS savings is subjected to penalty and loss of tax benefits.
A I only
B I and II only.
C I and III only.
D All of the above.

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