Can You Pass the Social Security Quiz? 78% of Older Adults Have Failed

Most of us know what it feels like to work everyday for years and years to make a living for ourselves and our families. After all that hard work, you should have the latter half of your life to look forward to to relax and retire. Hanging up that proverbial retirement plaque is a huge accomplishment, but it can also be scary to think about not having that steady source of income you're used to. That's where the government comes in.

Social security is one of those helpful resources that allows older adults to retire with whatever savings they have while still providing them with income based on their lifetime earnings.

For many older adults approaching retirement, Social Security represents a critical component of their financial planning. However, despite its importance, a recent survey conducted by MassMutual has revealed a concerning gap in knowledge among near-retirees regarding the program's rules and benefits.

Survey Findings

According to the survey results, a significant majority of respondents between the ages of 55 and 65, often referred to as the "golden years," displayed limited understanding of Social Security.

When presented with a 13-question true/false quiz about Social Security, 78% of respondents failed or barely passed. Alarmingly, only a small fraction of participants achieved a perfect score, highlighting a widespread lack of comprehension.

Test Your Knowledge

Before delving further into the survey findings, let's take a moment to test your own understanding of Social Security.

Consider whether the following statements are true or false:

1. In most cases, if I take benefits before my full retirement age, they will be reduced for early filing.

2. If I am receiving benefits before my full retirement age and continue to work, my benefits might be reduced based on how much I make.

3. If I have a spouse, he or she can receive benefits from my record even if he or she has no individual earnings history.

4. If I have a spouse and he or she passes away, I will receive both my full benefit and my deceased spouse’s full benefit.

5. Generally, if I am in a same-sex marriage, there are different eligibility requirements when it comes to Social Security retirement benefits.

6. The money that comes out of my paycheck for Social Security goes into a specific account for me and remains there, earning interest, until I begin to receive Social Security benefits.

7. If I get divorced, I might be able to collect Social Security benefits based on my ex-spouse’s Social Security earnings history.

8. Under current law, Social Security benefits could be reduced by 20% or more for everyone by 2035.

9. Under current Social Security law, full retirement age is 65 no matter when you were born.

10. If I file for retirement benefits and have dependent children age 18 or younger, they also may qualify for Social Security benefits.

11. If I delay taking Social Security benefits past the age of 70, I will continue to get delayed retirement credit increases each year I wait.

12. Social Security retirement benefits are subject to income tax just like withdrawals from a traditional IRA account.

13. I must be a U.S. citizen to collect Social Security retirement benefits.

Answers

After seeing the questions, let's see how many you got right.

1. True (92% answered correctly)

2. True (84%)

3. True (75%)

4. False (70%)

5. False (70%)

6. False (65%)

7. True (59%)

8. True (58%)

9. False (55%)

10. True (53%)

11. False (48%)

12. False (38%)

13. False (23%)

So, how did you do? Are you ready to be happily retired?

Understanding the Results

The survey revealed that while respondents generally understood basic concepts such as the reduction in benefits for early filing, they struggled with more nuanced aspects of Social Security.

For instance, less than half correctly identified the lack of benefit in delaying benefits past age 70. Additionally, a significant portion of respondents were unaware of their full retirement age, a crucial factor in making informed claiming decisions.

Implications for Retirement Planning

As the "silver tsunami" of baby boomers approaches retirement age, it's imperative for individuals to grasp the intricacies of Social Security. Understanding one's full retirement age, the implications of early or delayed filing, and spousal benefit options are essential for making sound financial decisions.

David Freitag, a Social Security expert at MassMutual, emphasizes the importance of Social Security literacy in avoiding costly mistakes in retirement planning. He emphasizes the need for individuals to anchor their retirement planning around key decisions regarding Social Security and health insurance.