How Much Do You Know about Social Security?
Published on June 25, 2015
Would you pass the Social Security quiz?
Mary Beth Franklin, contributing editor for Investment News, recently wrote an article that highlighted the fact that many Americans would flunk a Social Security quiz. The premise of her piece is that lack of full understanding about Social Security benefits could have a serious (negative) impact on your future retirement income.
We’ve said many times that Americans can no longer rely on having the trust fund available forever and that saving for retirement is an important priority. Ms. Franklin cites a true/false quiz that Massachusetts Mutual Life Insurance Company sent out via online survey. It was conducted by KRC research on behalf of Mass Mutual from February 26 to March 2. More than 1500 adults participated in the survey. Here are some of the results, which shine a spotlight on big gaps in knowledge about Social Security eligibility:
- 1) Seventy-one percent of respondents believe that full retirement age is still 65. This has not been true for a few years. It now varies by birth year. The current full retirement age of 66 is for people born from 1943 through 1954, and it will gradually increase to 67 for those born after 1959. You can check your current full retirement age with the Social Security website’s calculator.
- 2) Only 28 percent received a passing grade when asked basic questions about Social Security benefits and only one person who participated answered all 10 questions correctly.
- 3) Fifty-five percent of those surveyed erroneously believe they can continue working while collecting full Social Security retirement benefits, regardless of their age. The truth is that those who continue to work while collecting Social Security benefits forfeit $1 in benefits for every $2 they earn over $15,720 in 2015, if they are younger than full retirement age for the full year. The earnings cap reductions disappear once you reach full retirement age.
- 4) Three quarters of the respondents falsely believe that American citizenship is a requirement to receive Social Security benefits.
What will you receive?
Of course, we cannot stress enough how vital it is to be financially literate and to understand what you will be eligible to receive from Social Security—and when. There are all sorts of payout models according to age, marital status and working status and we strongly recommend you consult your financial adviser as to the best course of action. You can read all about Social Security benefits at www.ssa.gov.
When it comes to your self-directed retirement portfolio, we can’t stress enough how important it is to do your research and thoroughly understand your target investments for your self-directed retirement plan. As third-party administrators of these plans, we’ll handle all the paperwork and filing, and expedite the transactions; plus, our helpful professionals are available to answer any questions you have regarding the types of non-publicly traded assets allowed through self-direction. However, we never give investment advice, nor endorse any types of investments or strategies (except, of course, to contribute often to your self-directed IRA and to invest in what you know and understand).