University of Central Florida (UCF) FIN2100 Personal Finance and Investments Midterm 2 Practice Exam

Question: 1 / 450

Which of the following is considered an expected income source in retirement planning?

An annuity

An annuity is recognized as an expected income source in retirement planning because it provides a steady stream of income over a specified period or for the lifetime of the retiree, depending on the type of annuity purchased. This is particularly valuable for retirees who are looking for reliable cash flow to cover living expenses after they stop working.

While options like a vacation fund, a personal loan, and gifts from family members can provide some financial support, they do not qualify as reliable or expected income sources in the same way that an annuity does. A vacation fund is typically earmarked for leisure activities and does not contribute to retirement income. A personal loan is a liability that needs to be repaid, rather than a source of income. Lastly, gifts from family members are unpredictable and not a guaranteed income source. Therefore, an annuity stands out as a structured financial product intended specifically for income generation during retirement.

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A vacation fund

A personal loan

Gifts from family members

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