Retirement Needs Analysis Flashcards
7 cards from real CRPC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Retirement Needs Analysis flashcards as text
A couple estimates $90,000/year in retirement expenses. Social Security provides $36,000/year combined. What lump-sum portfolio is needed at retirement to fund the $54,000 annual gap for 25 years, assuming a 5% real return?
Answer: Approximately $760,000
The present value of a $54,000 annuity for 25 years at 5% is approximately $760,000 using the PV of annuity formula.
Which of the following adjustments to a retirement income plan would MOST reduce the probability of portfolio depletion?
Answer: Reducing the initial withdrawal rate from 4.5% to 3.5%
Reducing the initial withdrawal rate significantly lowers the annual draw on the portfolio, which is the most powerful lever for improving plan sustainability.
In retirement needs analysis, the 'present value of a future lump sum' calculation is most commonly used to:
Answer: Determine how much to invest today to meet a future retirement goal
The present value formula tells the planner how much must be invested today at a given rate to accumulate to a target lump sum at a future date.
A client's retirement plan assumes 6% annual portfolio growth and 3% inflation. What is the approximate 'real' rate of return used in purchasing-power-adjusted projections?
Answer: 2.9%
The real rate of return ≈ (1.06 / 1.03) − 1 ≈ 2.91%, approximately 2.9% after adjusting for inflation.
A CRPC practitioner discovers that a client's retirement plan has only a 55% probability of success in a Monte Carlo analysis. The MOST appropriate first step is to:
Answer: Discuss adjustments such as reducing spending or delaying retirement
A low success probability warrants a conversation about flexible adjustments—spending reductions, later retirement, or higher savings—before recommending product changes.
Healthcare costs in retirement are a significant planning concern. Which statement about Medicare is most accurate for retirement income planning purposes?
Answer: Clients must budget for premiums, deductibles, and uncovered expenses not paid by Medicare
Medicare covers many costs but clients still face premiums, deductibles, co-pays, and uncovered services like dental and long-term care that must be budgeted.
A client with a high retirement income replacement ratio (e.g., 95%) most likely has which characteristic?
Answer: Low pre-retirement income where fixed costs dominate spending
Lower-income households have less discretionary spending, so fixed essential costs represent a larger share of income, requiring a higher replacement ratio.