Financial Planning for Older Adults Flashcards
7 cards from real CFG practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Financial Planning for Older Adults flashcards as text
Which of the following documents grants a trusted person legal authority to make financial decisions on behalf of an incapacitated older adult?
Answer: Durable power of attorney
A durable power of attorney remains in effect (or becomes effective) during incapacity, allowing the named agent to manage financial affairs on the principal's behalf.
An 80-year-old client is in very poor health and has a large traditional IRA. Which strategy may be MOST advantageous from an estate planning perspective?
Answer: Name a charity as the IRA beneficiary to avoid income tax on distributions
Naming a qualified charity as IRA beneficiary eliminates income tax on distributions because charities are tax-exempt, making IRAs one of the most tax-efficient assets to leave to charity.
The SECURE 2.0 Act increased the required beginning date for RMDs. As of 2023, at what age must most individuals begin taking RMDs?
Answer: 73
SECURE 2.0 increased the RMD starting age to 73 for individuals who turn 72 after December 31, 2022, with a further increase to 75 scheduled for 2033.
Which type of annuity provides a guaranteed income stream for the life of the annuitant with NO remaining value for heirs upon death?
Answer: Life-only (straight life) annuity
A life-only annuity pays income for the annuitant's lifetime and ceases upon death, with no residual value, providing the highest monthly payment but no legacy.
Which age-related physical change most commonly affects an older adult's ability to tolerate financial stress and make complex decisions?
Answer: Reduced processing speed and working memory
Age-related declines in processing speed and working memory are the cognitive changes most directly linked to difficulty with complex financial decision-making.
A client aged 64 wants to retire but needs health insurance until Medicare eligibility at 65. Which option is MOST appropriate?
Answer: Purchase COBRA continuation coverage or an ACA marketplace plan
COBRA continuation or ACA marketplace plans are the standard bridge coverage options for early retirees who need health insurance before Medicare eligibility at 65.
What is 'age banding' in the context of long-term care insurance pricing?
Answer: Setting premium rates based on the age at which the policy is purchased
Age banding means premiums for long-term care insurance are determined by the applicant's age at policy purchase, with younger buyers paying significantly lower premiums.