More than half of near-retirees don’t know much about Social Security, apparently.
Just over one-third (35%) of people age 55 to 65 failed and another 18% earned a grade of “D” on a basic knowledge quiz about Social Security retirement benefits, while only 3% received an A+ by answering all 12 true/false statements correctly, according to the latest MassMutual Social Security consumer poll.
- TAKE THE QUIZ YOURSELF BELOW
Even more startling, over a quarter (26%) of individuals age 60 to 65 have no idea of the full retirement age.
There is good news, however, and an improving trend.
A large majority (83%) are very knowledgeable about the consequences of receiving Social Security benefits before reaching their full retirement age. A whopping 94% know that if they take benefits before full retirement age, their benefits will be reduced as a result of filing early while 86% 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 make.
“Today, Social Security is the primary guaranteed retirement income stream for Americans, besides pensions and annuities,” said Paul Lapiana, CFP, head of MassMutual U.S. product. “For those looking to maximize their retirement income stream, one option is to depend on an annuity to fill the gap and hold off filing for Social Security to grow delayed retirement credits and receive the largest possible benefit for life.”
During the COVID-19 pandemic, a few Social Security topics rose to the top:
- Survivor benefits: There was a lot of interest in learning the facts about survivor benefits, with 22% not knowing that it is not true that if a spouse passes away one can receive both their and their spouse’s full benefits.
- Divorcee benefits: Many were wondering about the impact of a divorce on Social Security retirement benefits. Nearly one third (30%) did not know that a divorced person might be able to collect Social Security benefits based on an ex-spouse’s earnings history.
- Zeros on a Social Security statement: Given the widespread negative impact of the pandemic on businesses and jobs, and increased needs for caregiving of children and aging relatives, some will be coming out of the pandemic with zeros or greatly decreased earnings cited on their Social Security statements (aka: ‘the green line form’). Since retirement benefits are based on the top 35 years of earnings, if 35 or fewer years is all you have to show, this could negatively impact your benefits for life.
“As with most things in life, knowledge is power, and choices should be made on purpose and not by accident,” said David Freitag, a financial planning consultant with MassMutual and long-time Social Security expert. “With Social Security, there are a lot of options to consider. Make the wrong choice, and you will be leaving money on the table for the rest of your life.”
The study consisted of an online poll of 12 true/false statements that was commissioned by MassMutual and conducted by PSB Research from March 1 to 9, 2021 among 1,500 Americans nearing retirement (age 55-65 who have not filed for Social Security retirement benefits). Click here to see complete results.
The first time MassMutual conducted a very similar consumer poll in 2015, 62% of those age 50+ failed. In 2018, 47% failed. In 2020, 33% failed.
Take the ‘true or false’ quiz
Answer each of the following 12 questions “true” or “false.” Correct answers appear below, along with grading scale.
- If I take benefits before my full retirement age, they will be reduced for early filing.
- 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.
- Once I start collecting Social Security, my benefit payments will never change.
- If I have a spouse, he or she can receive benefits from my record even if he or she has no individual earnings
- 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.
- 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.
- Under current Social Security law, full retirement age is 65 no matter when you were born.
- As a divorced person, I might be able to collect Social Security benefits based on my ex-spouse’s earnings history.
- Under current law, Social Security benefits could be reduced for everyone in 2035.
- If I file for retirement benefits and have dependent children age 18 or younger, they also may qualify for Social Security benefits.
- 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.
- I must be a U.S. citizen to collect Social Security retirement benefits.
Answer key: 1. True; 2. True; 3. False; 4. True; 5. False; 6. False; 7. False; 8. True; 9. True; 10. True; 11. False; 12. False.
Grades: Answer zero incorrect: A+. One incorrect: A. Two incorrect: B. Three incorrect: C. Four incorrect: D. Five or more incorrect: F.
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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.
