CFP (Certified Financial Planner) Practice Questions — All Questions

The power of compounding rewards investors who:

• a.Wait until retirement to start
• b.Start saving and investing early✓
• c.Withdraw frequently
• d.Avoid all growth assets

Starting early gives returns more time to compound.

Tax-advantaged retirement accounts generally:

• a.Offer tax benefits to encourage retirement saving✓
• b.Are taxed more heavily
• c.Cannot be invested
• d.Guarantee returns

Retirement accounts provide tax advantages to encourage long-term saving.

A key retirement-planning risk is longevity risk, which is the risk of:

• a.Dying too early
• b.Markets rising
• c.Outliving one's savings✓
• d.Paying off a mortgage

Longevity risk is outliving one's assets in retirement.

Employer matching contributions to a retirement plan should generally be:

• a.Declined
• b.Ignored
• c.Delayed for years
• d.Captured, since they are effectively free money✓

Employer matches boost savings and should generally be maximized.