Your Money: Quiz on retirement investments
By Juergen Selk
By Juergen Selk
Quiz on retirement investments
Here are a few questions to test your knowledge of retirement investments.
True or False?
1. There are limits to how much you can save for retirement on a tax-deferred basis.
2. There is a tax penalty on all premature withdrawals from your IRA.
3. Social Security and Medicare wont support you comfortably in retirement.
4. Most retirees should not invest solely in bonds.
1. False. Contributions are limited to $2,000/year in an IRA and the greater of 15 percent of earnings or $10,000/year in a 401(k). However, unlimited contributions are permitted to tax-deferred annuities.
2. False. Usually, before age 59 1/2, the taxable portion of an IRA distribution is subject to a 10 percent penalty tax, as well as ordinary income taxes. But there are exceptions for certain medical or educational expenses, and, in some cases, for substantially equal payments over a number of years.
3. True. That one was a giveaway. In addition to your pension, IRA and 401(k), consider a long-term insurance policy to pay nursing home or assisted living expenses without depleting your other assets.
4. True. While bonds are appropriate to preserve wealth and earn income, over time, to stay ahead of inflation and maintain the purchasing power of your assets, some combination of growth- and income-oriented investments may be preferable.
Juergen Selk is a financial consultant at Salomon Smith Barney in Rockford. Salomon Smith Barney does not offer tax or legal advice. If you have an investment or finance-related question, send it to The Rock River Times or to Juergen.Selk@rssmb.com!