Hrm/531 Final Test

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TUTORIAL QUESTIONS 9 SHORT-ANSWER QUESTIONS 1. How is the amount of someone’s Social Security benefit determined? What percentage of income does Social Security typically replace? What percentage of full benefits do those retiring at age 62 receive? 2. What is vesting? What does this mean for an employee? An employer? Why is it important when initially considering a job offer? When thinking about changing jobs? 3. Compare and contrast a defined-contribution plan and a defined-benefit plan. Who is responsible for the investment of funds for each plan? How are the benefits determined? Who are these advantageous to an employer? 4. List common examples of a defined-contribution plan. For each, cite any unique advantages or disadvantages for the employees 5. How does traditional IRA differ from the Roth IRA? What characteristics are common to both? 6. Can a nonworking spouse have a traditional IRA? If so, what restrictions apply? 7. What s meant…show more content…
Determine, in dollars, the future value of the shortfall 30 years from now, assuming an inflation rate of 5% d. Assuming an 8% nominal rate of return and 25 years in retirement, calculate their necessary annual investment to reach their investment goals 4. Russell and Charmin have current living expense of $97,000 a year. Estimate the present value amount of income they will need to maintain their level of living in retirement. Assume an average tax rate of 20% and 80% income replacement ratio 5. Anita currently has 25 years of service and an average annual salary of $37,000 over her last five years of employment. She was looking forward to retirement but has been offered a promotion. If she continues to work for five more years and increases her average annual salary to $47,000, how will her monthly pension benefit change according to the typical pension benefit formula as described in this chapter? If Anita’s plan is similar to most pension plans, how will it adjust for

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