Practice Test GeeksRMA Practice Test
← All RMA Flashcard Decks

Retirement Planning & Strategies Flashcards

7 cards from real RMA 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 Planning & Strategies flashcards as text

  1. A client age 58 wants to retire early. Which strategy allows penalty-free IRA withdrawals before age 59½?

    Answer: Substantially Equal Periodic Payments (SEPP) under Rule 72(t)

    Rule 72(t) SEPP allows penalty-free early IRA distributions if taken as substantially equal periodic payments for at least 5 years or until age 59½, whichever is longer.

  2. Which Social Security claiming strategy allows a spouse to collect benefits while the higher earner's benefit continues to grow?

    Answer: Restricted application for spousal benefits

    The restricted application strategy (available to those born before January 2, 1954) allows a spouse to claim only spousal benefits while their own benefit accrues delayed retirement credits.

  3. A retiree's portfolio uses a 'bucket strategy.' What is the PRIMARY purpose of the short-term bucket?

    Answer: Fund 1–2 years of expenses to avoid selling equities in a downturn

    The short-term bucket holds cash or near-cash to cover near-term living expenses, preventing forced liquidation of growth assets during market downturns.

  4. In retirement income planning, what does 'longevity risk' specifically refer to?

    Answer: The risk of outliving one's financial assets

    Longevity risk is the possibility that a retiree will live longer than anticipated and exhaust their savings before death.

  5. Which withdrawal rate is commonly cited as the '4% rule' benchmark for retirement portfolios?

    Answer: A first-year withdrawal of 4% of portfolio value, inflation-adjusted annually, with high historical success over 30 years

    The 4% rule, derived from the Bengen study and Trinity Study, suggests withdrawing 4% of initial portfolio value in year one and adjusting for inflation, showing high historical success over 30-year retirements.

  6. A 65-year-old client has $500,000 in a traditional IRA and $200,000 in a Roth IRA. Which account should generally be drawn from FIRST to minimize lifetime taxes?

    Answer: Traditional IRA first to reduce future RMDs

    Drawing from the traditional IRA first can reduce the balance subject to future RMDs and may keep income in lower tax brackets, minimizing lifetime taxes.

  7. What is a 'Monte Carlo simulation' used for in retirement planning?

    Answer: Modeling thousands of random return sequences to estimate the probability a retirement plan succeeds

    Monte Carlo simulations run thousands of randomized return scenarios to estimate the probability that a portfolio will sustain withdrawals throughout retirement.