Retirement Knowledge Flashcard

Front

What are some reasons why traditional retirement may not be suitable for everyone?

Back

Financial constraints or a desire to keep working.

Front

What is an example of an employer-sponsored retirement account?

Back

401(k) plan.

Front

What is one benefit of starting to save for retirement early?

Back

More time to grow earnings through interest.

Front

What is the recommended percentage of income to save each year if you start saving for retirement in your 20s or 30s?

Back

10%.

Front

What types of accounts are typically used for retirement savings?

Back

Specialized retirement accounts like IRAs and 401(k)s.

Front

What is the purpose of a 401(k) plan?

Back

To provide employees with a tax-advantaged way to save for retirement.

Front

What is an IRA and how does it differ from a 401(k)?

Back

An IRA (Individual Retirement Account) is a personal retirement savings account that offers tax advantages, while a 401(k) is employer-sponsored.

Front

What are the tax benefits of contributing to a traditional IRA?

Back

Contributions may be tax-deductible, and earnings grow tax-deferred until withdrawal.

Front

What is the significance of compound interest in retirement savings?

Back

Compound interest allows savings to grow exponentially over time, increasing the total amount available at retirement.

Front

What factors should be considered when determining how much to save for retirement?

Back

Current income, expected retirement lifestyle, age, and financial goals.