September 25, 2023

Most Americans fail this Social Security quiz. Can you pass on?

Pop Quiz: True or False – Social Security retirement benefits are subject to income tax, just like withdrawals from a traditional IRA account.

If you answered “False,” you are smarter than more than 60% of your fellow Americans approaching retirement. In fact, if you know just about everything about how Social Security works, you’re very likely smarter than nearly 70% of people close to retirement age when it comes to understanding one of your main sources of retirement income.

Those are the findings of the 2023 Social Security retirement benefits quiz of Massachusetts Mutual Life Insurance Co. near-retirees. Of the 1,500 people aged 55 to 65 who took the quiz, 69% failed or barely passed the 13-question survey (shown in full below). And only 1% managed to answer all questions correctly.

For hands-on help understanding Social Security, consider matching for free with a vetted financial advisor.

Even more concerning is the fact that more people failed the quiz this year than last year, with a third (35%) getting six or more questions wrong compared to 29% last year.

“One of the most concerning findings was that 43% of near-retirees don’t know what percentage of their income will come from Social Security benefits after retirement,” said Paul LaPiana, CFP, head of product at MassMutual. “Knowing your total retirement income and where it comes from is part of the basics of retirement planning.”

If you are ready to be matched with local advisors who can help you achieve your financial goals, start now.

How do you stack? Try the true or false quiz and find out for yourself — and you’ll even be ahead of No. 12. (Social Security benefits aren’t subject to income tax until you exceed a certain income limit, which is $25,000 for individual filers and $32,000 for joint tax returns. .)

2023 MassMutual Social Security Retirement Benefits Quiz

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

  2. If I receive benefits before full retirement age and continue to work, my benefits may be reduced based on how much I earn.

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

  4. If I’m in a same-sex marriage, there are generally other requirements to qualify for Social Security retirement benefits.

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

  6. The money that comes out of my Social Security paycheck goes to a specific account for me and stays there, with interest, until I start receiving Social Security benefits.

  7. If I claim retirement benefits and have dependent children age 18 or younger, they may also be eligible for Social Security benefits.

  8. If I get a divorce, I may be able to collect Social Security benefits based on my ex-spouse’s income history.

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

  10. Under current Social Security law, the full retirement age is 65, regardless of when you were born.

  11. If I delay taking Social Security benefits after age 70, every year I wait I will get a delayed retirement credit increase.

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

  13. I must be a US citizen to receive Social Security retirement benefits.

answers: 1. true; 2. true; 3. true; 4. false; 5. false; 6. false; 7. true; 8. true; 9. true; 10. false; 11. false; 12. false; 13. false.

qualities: 0-1 error A; 2 wrong B; 3 wrong C; 4-5 wrong D; 6 or more wrong F.

It boils down

Social Security is more complicated than simply waiting until full retirement age to claim a check. The question of when to claim benefits, how to claim them, and how to incorporate Social Security into your overall retirement plan can be complicated. There are, in fact, 81 different ways that a married couple can apply for benefits. One way to figure it all out is to check out SmartAsset’s Social Security Calculator. It can also be beneficial to match for free with a vetted financial advisor.

Tips for managing your retirement plans

  • How Much Money Do You Need to Save to Retire? Should You Postpone Social Security? These are just a few of the questions that pre-retirees face. A financial advisor can help you answer these. Finding a financial advisor doesn’t have to be difficult. SmartAsset’s free tool pairs you with up to three vetted financial advisors serving your area, and you can interview your advisor matches for free to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

  • Fidelity recommends that by age 67, you have 10 times your annual income saved for retirement. To find out if you’re on track, try SmartAsset’s retirement calculator. This free tool estimates how much you’ll have when it’s time to retire.

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The post Can You Pass This Social Security Quiz? Nearly 7 out of 10 people struggle with these basic questions first appeared on SmartAsset Blog.

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