More than 4 in 10 near retirees failed the latest Social Security retirement benefits quiz from MassMutual—and that’s actually a slight improvement over last year’s scores.
40% of near retirees believe Social Security benefits will be their biggest source of income in retirement, followed by a 401(k) or 403(b)
The Social Security retirement benefits quiz of near-retirees from MassMutual exposes that too many—78%—failed or barely passed. In fact, 37% got a D in addition to the 41% who failed. This is a slight improvement over 2023, when 47% failed the quiz. Less than 1% received an A+ by answering all 13 true/false statements correctly.
“We have been conducting this quiz with near retirees for the last 10 years and with new cohorts nearing retirement each and every year, we see similar patterns of confusion when it comes to Social Security retirement benefits,” said Paul LaPiana, CFP, head of brand, product and affiliated distribution with MassMutual. “What’s more, we are finding that people at this stage of their lives should have some basic estate planning documents in place, and a staggering number do not.”
Other key findings:
- More near retirees are knowledgeable about spousal, survivor and divorcee benefits compared to last year, but it is still not enough. Three out of four (75%) answered correctly that if they have a spouse, their spouse can receive benefits from their record even if the spouse has no individual earnings history. Seven out of 10 (70%) answered correctly that a surviving spouse does not receive both their full benefit and their spouse’s full benefit in the event their spouse passes away. And 59% know that if they get divorced, they might be able to collect Social Security benefits based on their ex-spouse’s Social Security earnings history.
- A surprising 45% of near retirees do not know the current full retirement age. However, most are knowledgeable about the consequences of receiving Social Security benefits before reaching their full retirement age. 92% know that if they take benefits before full retirement, their benefits will be reduced and 84% know that if they receive benefits before their full retirement age and continue to work, their benefits may be reduced based on how much they earn. But more than half (52%) do not know that the ability to receive delayed retirement credit increases ends at age 70.
- Social Security continues to be the largest anticipated source of income in retirement. 40% of near retirees believe Social Security benefits will be their biggest source of income in retirement followed by a 401(k) or 403(b) plan (17%), pension (13%) and investments (11%).
- More than one-third (36%) of near retirees believe their retirement income would not be able to sustain them for more than 10 years. Further, only 20% believe their retirement plans account for inflation and market volatility.
- Only one third of near retirees have an estate planning document in place. Only 35% report having a will, 33% report having a medical advance directive, 29% report having a health care durable power of attorney, and 25% report having a financial durable power of attorney. Furthermore, only 22% have documented all of their financial information and online usernames and passwords in one place as part of their estate plans, and 23% never plan to.
“The good news is that these individuals have not yet filed for Social Security benefits so they have time to understand the basic facts that can either help or hurt their financial situations in retirement,” added LaPiana. “And for those nearing retirement that have not gotten their estate planning documents in place yet, I urge them to make this a priority.”
The online poll about Social Security retirement benefits commissioned by MassMutual was conducted by PSB Insights from Jan. 23 to Jan. 30, 2024 among 1,500 Americans nearing retirement (age 55-65) who have not filed for Social Security retirement benefits.
Read the full 2024 MassMutual Social Security Retirement Benefits Near Retiree Pulse Check Report here.
SEE ALSO:
• Early 2025 Social Security COLA Forecast Inches Up on Inflation Data
• 7 Key Social Security Metrics for 2024
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.