Just 28 percent of Americans received a passing grade (60 percent or higher) when asked basic Social Security questions, a new study from MassMutual finds. Moreover, from a pool of 1,500 respondents ages 18 to 65, just one person answered all 10 true/false questions correctly.
The quiz touched on a range of topics, including the national retirement age, spousal benefits and eligibility for benefits. The high failure rate suggests what a number of advisors already know: Too many Americans are lacking the knowledge and tools that will allow their retirement reality to match their retirement dreams.
“Perhaps the greatest Social Security deficit in this country is the lack of education around the retirement benefits of the program, which presents an opportunity and responsibility to financial professionals,” said Michael R. Fanning, executive vice president, U.S. Insurance Group, MassMutual. “With millions of Americans nearing retirement each year, many may be at risk of underutilizing a critical component of their retirement income stream.”
If there’s a silver lining, it’s self-awareness: Just 8 percent of those surveyed considered themselves to be very knowledgeable on the subject of Social Security.
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And that’s where you come in.
How does your own knowledge stack up? Continue reading for the full quiz.
1. True or False? Social Security retirement benefits are based on my earnings history, so I’ll receive the same monthly benefit amount no matter when I start collecting.
A: False. If you collect Social Security retirement benefits before reaching full retirement age, you effectively lock in a lower monthly benefit amount. If you wait to begin collecting until after you reach full retirement age, you become eligible for delayed retirement credits. These credits increase your monthly benefit amount by 8 percent each year that you delay collecting, up to a maximum of 32 percent. Once you reach age 70, no additional delayed retirement credits accrue.
Source: Social Security Administration, Retirement Planner: Benefits by Year of Birth; http://www. socialsecurity.gov/retire2/agereduction.htm
2. True or False? If my spouse dies, I will continue to receive both my own benefit and my deceased spouse’s benefit.
A: False. Social Security retirement benefits are only paid while you are alive. Assuming that you qualify, you would receive the greater of your own benefit or your spouse’s benefit, but not both.
Source: Social Security Administration, Retirement Planner: Benefits for Your Spouse; http://www.socialsecurity.gov/retire2/ yourspouse.htm
3. True or False? I must be a U.S. citizen to collect Social Security retirement benefits.
A: False. You do not have to be a U.S. citizen to qualify for Social Security retirement benefits. Resident aliens who pay into the Social Security system may qualify to receive retirement benefits, assuming they earn enough credits and meet additional criteria. To become part of the Social Security system, non-U.S. citizens must have lawful alien status, permission by the U.S. Citizenship and Immigration Services (USCIS) to work in the U.S. and a Social Security Number.
Source: Social Security Administration, Social Security Handbook, Evidence of U.S. Citizenship, §1725;http://www.ssa.gov/OP_Home/handbook/ handbook.17/handbook-1725.html
4. True or False? Under current Social Security law, full retirement age is 65.
A: False. Your full retirement age is based on the year you were born. For people born between 1943 and 1954, the full retirement age is 66. If you were born in 1960 or later, the full retirement age is 67. For anyone born between 1955 and 1959, the full retirement age increases gradually.
Source: Social Security Administration, Full Retirement Age: If You Were Born between 1943 and 1954; http://www.ssa. gov/retirement/1943.html