Test Your Retirement Knowledge

By The Motley Fool Staff

Do you have the facts on retirement? Let's find out. We've pulled together four questions related to the topic. Break out your pencils and write down the answers to each, then see how much you know about life during the golden years.

The Questions
1. How many Americans are financially prepared to retire when they reach the age of 65?
A. Nine out of 10
B. Seven out of 10
C. Five out of 10
D. Three out of 10
E. One out of 10

2. What percentage of employees who qualify for 401(k) plans actually contribute to them?
A. 90 percent
B. 80 percent
C. 75 percent
D. 70 percent
E. 60 percent

3. At the end of World War II, 42 workers paid into Social Security for every one person receiving benefits. How many people currently contribute to Social Security for each recipient?
A. 35
B. 20
C. 11
D. 5
E. 3

4. When Elvis Presley died in 1977, he left an estate worth more than $10 million. What percentage of his estate was lost in probate?
A. 19 percent
B. 27 percent
C. 41 percent
D. 52 percent
E. 73 percent

The Answers
1. The correct is answer is E. Are you surprised to find out that only one out of 10 Americans is prepared for retirement by the age of 65? It's a fact. Will you be that one carefree retiree? Or will you be one of the nine who are hawking their Hummel figurines on e-Bay to make ends meet? A more important question: How can you control which category you're going to be in? The answer is to plan ahead. And it's never too early or too late to start.

• Check out different sites' retirement information, such as that at ThirdAge Money or The Motley Fool's Retirement Planning Area.
• Take a class. There are a number of retirement events these days put on by people like the American Savings Education Council (look for their RetireMint events) and AARP. You can also take an online class from the comfort of your own lay-z-boy, like The Motley Fool's Rule Your Retirement Online Seminar. These classes can help you develop a detailed plan and address everything from your costs to investments to estate planning.

2. The correct answer is C. The good news is that 75 percent of all employees who qualify for a 401(k) plan contribute. It's one of the very best ways to save for your retirement. Some employers will even match your contributions. Free money! But there's more to learn and decisions to make. Are your 401(k) dollars in the right fund? Are you paying fees that can peck away at your nest egg?

• Start by checking with your plan provider and HR department for more information. After that, look for independent sources of information like Morningstar's mutual fund ratings or ThirdAge Money or The Motley Fool's 401(k) area.
• If you work for a hospital, a non-profit or a church, your retirement program is probably a 403(b). Try some specialized sources of information such as the http://www.403bwise.com Web site.

3. The correct answer is E. It's a scary fact, but unsurprising to most. In the last 55 years, the number of payees per recipient has fallen to three. There are only three of us paying in for every one person receiving funds. What's going to happen when the baby boomers retire? Will the system go bankrupt? Social Security reform has been a hot issue for some time, and the debate has recently heated up thanks to the upcoming presidential election.

4. The correct answer is E. Ouch! Someone led the King financially astray: 73 percent of his fortune was lost in probate. Thank goodness Graceland turned into a cash cow for Priscilla and Lisa Marie. Leaving this world permanently isn't something that most of us like to think about, but we should all plan for it. Why not take care of it while you're planning your retirement?

The above information was taken from the Motley Fool's upcoming Rule Your Retirement Online Seminar, which walks you through these tasks step-by-step and provides further information about asset allocation as you near and enter retirement, leaving something for the kids and creating a contingency plan to weather any storm.