SOCIAL SECURITY MATH

PUBLISHED MON, APR 5 20211:26 PM EDT, UPDATED MON, APR 5 20214:29 PM EDT
Lorie Konish@LORIEKONISH

KEY POINTS

• Deciding when to claim Social Security retirement benefits is one of the biggest financial decisions you can make.

• Yet a recent quiz given to near-retirees by MassMutual found most people could not pass a 12-question true or false quiz.

• Here’s what tended to stump respondents the most. Test your knowledge to see if you could beat them.

When faced with a quiz on Social Security claiming rules, many people who are on the brink of retirement fail.

MassMutual recently gave a 12-question true/false quiz to 1,500 people ages 55 to 65 who have not yet claimed their benefits.

Just 3% of the respondents were able to answer all of the questions correctly.

Meanwhile, 35% of the respondents failed the quiz altogether, and 18% received a D grade.

The results are “marginally better” since MassMutual first started conducting the test in 2015, according to David Freitag, a financial planning consultant and Social Security expert at the firm.

Most respondents — 94% — were able to correctly say that their retirement benefits will be reduced if they claim them before full retirement age (generally 66 or 67, depending on your year of birth).

A majority — 86% — were also able to accurately affirm that their Social Security benefits may be reduced if they collect their monthly checks before full retirement age and continue to work.

But other questions tended to stump respondents.

The survey respondents were less inclined to accurately gauge the rules for spousal benefits after divorce and survivor benefits after the death of a spouse.

The results showed that 22% of near-retirees did not know that if a spouse passed away you cannot collect both your own and your spouse’s benefits. (Typically, you get either yours or your spouse’s, whichever is higher).

Meanwhile, 30% of respondents did not know that they might be able to claim benefits on their ex-spouse’s work record. (You must have been married for at least 10 years, among other qualifications.)

Each of those benefits comes with distinct rules, Freitag said, which means it’s important to understand them before claiming.

“Although survivor benefits sound like spousal benefits, they’re totally different,” he said.

While the Social Security Administration has resources available to help with claiming decisions, an even better way may be consulting a financial advisor who can help walk you through the decision, Freitag said.

The quiz also found that just 54% of respondents were able to correctly identify whether their benefits will continue to increase if they delay claiming retirement benefits past age 70. The answer is no.

Moreover, if you delay past 70, you can only go back six months to make up for lost monthly checks, Freitag said.

“The benefits that they have missed, they’re never going to see,” he said.

Test your knowledge

Curious to see how well you would do on the quiz? Decide whether each statement below is true or false, then check your responses against the answer key below.

1. If I take benefits before my full retirement age, they will be reduced for early filing.

2. 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.

3. Once I start collecting Social Security, my benefit payments will never change.

4. If I have a spouse, he or she can receive benefits from my record even if he or she has no individual earnings history.

5. 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.

6. 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.

7. Under current Social Security law, full retirement age is 65 no matter when you were born.

8. As a divorced person, I might be able to collect Social Security benefits based on my ex-spouse’s earnings history.

9. Under current law, Social Security benefits could be reduced for everyone in 2035.

10. If I file for retirement benefits and have dependent children age 18 or younger, they also may qualify for Social Security benefits.

11. 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.

12. I must be a U.S. citizen to collect Social Security retirement benefits.

Answers:

1. True

2. True

3. False

4. True

5. False

6. False

7. False

8. True

9. True

10. True

11. False

12. False