Advanced Diploma of Financial Planning (ADFP) Practice Test

Disable ads (and more) with a membership for a one time $2.99 payment

Prepare for ADFP Test. Use flashcards and multiple choice questions, each with hints and explanations for better understanding. Start studying today!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

What percentage of current income do most clients typically need to maintain their pre-retirement lifestyle?

40-50%
60-70%
70-80%
80-90%

The correct answer is: 70-80%

Most clients typically need a percentage between 70-80% of their pre-retirement income to maintain their lifestyle in retirement. This percentage is rooted in the understanding that many expenses decrease once individuals retire. For instance, costs associated with work-related expenses such as commuting, professional attire, and contributions to retirement savings are often eliminated. Additionally, some retirees may find that they spend less on taxes or at least have different tax implications due to a lower income level. Moreover, retirees often have paid off their primary residences or significantly reduced their housing costs, which impacts their overall required income. Lifestyle factors can also vary; some may wish to travel more, while others might spend less due to changes in personal circumstances. However, the general guideline suggests that achieving 70-80% of pre-retirement income helps facilitate maintaining a comfortable standard of living for many retirees, thereby making this range an important benchmark for financial planning. This understanding is essential for developing retirement strategies and financial plans that address the anticipated needs and desires of clients during their retirement years.