Personal Finance

35% of Older Americans Fail This Basic Retirement Test

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Social Security is the cornerstone of retirement for millions of people. Yet, Americans remain largely ignorant of key aspects of how this program works, a new survey has found.

More than one-third (35%) of near-retirees ages 55 to 65 know so little that they failed a basic knowledge quiz about Social Security retirement benefits, according to the latest MassMutual Social Security consumer poll. The poll surveyed 1,500 Americans who are nearing retirement but have not filed for Social Security retirement benefits yet.

Another 18% earned a grade of D, and just 3% received an A+ by answering all 12 true/false statements on the quiz correctly.

This lack of knowledge about Social Security can set up retirees to make some poor — or even potentially disastrous — decisions. For example, the poll found that more than one-quarter (26%) of individuals ages 60 to 65 did not know when full retirement age occurs.

As we have reported in “9 Social Security Terms Everyone Should Know“:

“It’s important to know your full retirement age because claiming your Social Security benefits before or after that age will lower or increase the amount of your benefit payment, respectively.”

Fortunately, the news from the poll was not all bad. For example:

  • 83% of respondents understood the consequences of receiving Social Security benefits before reaching their full retirement age.
  • 94% knew taking benefits before full retirement age will result in reduced monthly checks.
  • 86% understood that receiving benefits before full retirement age and continuing to work could result in reduced benefits.

Still, near-retirees have some work to do if they are to better understand a program that will have a deep and lasting impact on most of their lives.

For example, the survey found that 22% apparently believe when a spouse passes away, the surviving spouse can collect both his or her full benefit and the spouse’s full benefit. However, this is not true. Instead, the surviving spouse receives the larger of the two benefit amounts.

Another 30% were unaware that a divorced person might be able to collect Social Security benefits based on an ex-spouse’s earnings history.

Getting answers to Social Security questions

If you are among those who might need a little help understanding Social Security — and figuring out the best strategy for claiming your benefits — consider using the services of Money Talks News’ partner Social Security Choices.

This company is one of a handful that provide a personalized analysis of various claiming strategies. While most charge in the $50 range, Social Security Choices sells its product for $39.99. But Money Talks News readers can do even better.

When you buy a report, simply use the coupon code “moneytalks” to get a $10 discount.

Learn more about the service in “A Simple Way to Maximize Your Social Security.”

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

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