Now It's Finally Time to Start Spending My Retirement Nest Egg Not so fast! People work long and hard for years on their retirement plans. Paying smart attention to the plans doesn't stop when it's time to enjoy the fruits of the labor and sacrifice. When it comes time for you to begin using your funds, you'll need to make sure you follow some rules in order to avoid unnecessary expenses. Some questions follow that will help you remember wise ways to manage your money as well as avoid pitfalls that could cost you. Keeping in mind that the primary purpose of tax-sheltered plans is to provide for your retirement, there are regulations in place to discourage early withdrawals, which presumably are intended for uses other than funding your retirement. That discouragement comes in the form of paying penalties and some taxes for which you would not otherwise be liable. However, there are some withdrawals allowed that wouldn't require you to pay penalties, as long as certain qualifications are satisfied. What are some of these penalty-free withdrawals? Check all that apply. O Early retirement O Vacation O Wedding O Account loan O College expenses O Pay down debt O O O

Now It's Finally Time to Start Spending My Retirement Nest Egg Not so fast! People work long and hard for years on their retirement plans. Paying smart attention to the plans doesn't stop when it's time to enjoy the fruits of the labor and sacrifice. When it comes time for you to begin using your funds, you'll need to make sure you follow some rules in order to avoid unnecessary expenses. Some questions follow that will help you remember wise ways to manage your money as well as avoid pitfalls that could cost you. Keeping in mind that the primary purpose of tax-sheltered plans is to provide for your retirement, there are regulations in place to discourage early withdrawals, which presumably are intended for uses other than funding your retirement. That discouragement comes in the form of paying penalties and some taxes for which you would not otherwise be liable. However, there are some withdrawals allowed that wouldn't require you to pay penalties, as long as certain qualifications are satisfied. What are some of these penalty-free withdrawals? Check all that apply. O Early retirement O Vacation O Wedding O Account loan O College expenses O Pay down debt O O O

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Interest Factors - Present Value of an Annuity
Years 2%
3%
4%
5%
15
12.8493
11.9379 11.1184 10.3797
16
13.5777
12.5611
11.6523
10.8378
17
14.2919
13.1661
12.1657
11.2741
18
14.9920
13.7535
12.6593
11.6896
19
15.6785
14.3238
13.1339
12.0853
20
16.3514
14.8775
13.5903
12.4622
21
17.0112
15.4150
14.0292
12.8212
22
17.6580
15.9369
14.4511
13.1630
23
18.2922
16.4436
14.8568
13.4886
24
18.9139
16.9355
15.2470
13.7986
25
19.5235
17.4131
15.6221
14.0939
26
20.1210
17.8768
15.9828
14.3752
27
20.7069
18.3270
16.3296
14.6430
28
21.2813
18.7641
16.6631
14.8981
29
21.8444
19.1885
16.9837
15.1411
30
22.3965
19.6004
17.2920
15.3725
40
27.3555
23.1148
19.7928
17.1591
Based on GARMAN/FORGUE. Personal Finance, 11E. © 2012 South-Western, a part of Cengage Learning, Inc.
Maria might want to have more money during her retirement years. What are some good options she should explore? Check all that apply.
U Try to find a way to earn more interest on her nest egg balance
Get a part-time job
O Buy an annuity
O withdraw less per year than the preceding calculation indicates

Now It's Finally Time to Start Spending My Retirement Nest Egg
Not so fast! People work long and hard for years on their retirement plans. Paying smart attention to the plans doesn't stop when it's
time to enjoy the fruits of the labor and sacrifice. When it comes time for you to begin using your funds, you'll need to make sure you
follow some rules in order to avoid unnecessary expenses. Some questions follow that will help you remember wise ways to manage
your money as well as avoid pitfalls that could cost you.
Keeping in mind that the primary purpose of tax-sheltered plans is to provide for your retirement, there are regulations in place to discourage early
withdrawals, which presumably are intended for uses other than funding your retirement. That discouragement comes in the form of paying penalties
and some taxes for which you would not otherwise be liable. However, there are some withdrawals allowed that wouldn't require you to pay penalties,
as long as certain qualifications are satisfied. What are some of these penalty-free withdrawals? Check all that apply.
O Early retirement
O vacation
O Wedding
O Account loan
O College expenses
O Pay down debt
It can be costly to spend your funds before the retirement rules allow if, for any reason, that spending doesn't fall into the narrow range of penalty-
free early withdrawals. The farther away you are from retirement age, the cost that will most likely have the greatest negative impact is the
The primary reason for the IRS 20% withholding rule is to:
O Make sure at least some of the income taxes on the withdrawal are paid
O Discourage early withdrawals
O Create more paperwork
Maria is finally ready to retire with a nest egg of $400,000. She wants her money to last 25 years and, taking inflation into consideration, expects the
balance in her nest egg to earn 3% per year. Use the following interest table to compute how much Maria could withdraw per year before her money
ran out. Round your answer to the nearest dollar.

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