Do you receive Social Security? Are you one of the approximate 59 million Americans who receive Social Security? These benefits are paid to nine out of ten Americans over the age of 65. And it is estimated that some 165 million Americans pay payroll taxes into the system currently. However after reading an article on Yahoo Finance it seems some educational information on Social Security may be needed at least as the survey I am about to go over and quiz you on as well. The article was published on Yahoo Finance titled “Take the Social Security quiz that 72% of Americans failed” by Madi Woodruff on June 17, 2015.
The quiz was done by MassMutual, and 72% of Americans managed to pass the ten question quiz. As a financial planning masters degree candidate I was fairly confident going into the short quiz and I did get 100% on it. But had it not been for my educational requirements for my degree I am fairly certain I would not have done as well. My mother did pass missing only one question, but she and my father recently retired and together the three of us discussed their options for Social Security benefits. She passed the quiz along to a retired friend of the family who retired from the government and they I guess took advantage of at least one of the retirement seminars offered by the Federal government for its employees and also scored a 100%. My uncle, which helps rural farmers in the Midwest with their finances, managed a 60%. So it seems the best thing to do with regards to Social Security is to educate yourself, go to the Social Security office and get answers, or seek a financial planner for assistance.
Why is this so important you may ask? Well, more than half of married couples and 74% of unmarried individuals rely on these benefits for more than half of their income. For these people, it is more important than ever to have a solid strategy for Social Security benefits. And the more you know prior to collecting your benefits the better off you will be and in reality thousands of dollars could be at risk. It is imperative to have a plan and to adhere to it when the time comes. And since the traditional pension plan is becoming a thing of the past it becomes even more important to have a solid plan for collecting these valuable benefits.
The quiz is a brief True and False format and I will use the MassMutual quiz as a basis here with full rights being given to MassMutual and from Yahoo Finance where I found the original story that inspired this post. The Yahoo article can be found at www.financial.yahoo.com/news/social-security-quiz. After the quiz, I will give a brief explanation for each answer to help reinforce the idea of the question and educate some as well.
1. Social Security benefits are based on my earnings so I will receive the same monthly benefit no matter when I start collecting.
2. If my spouse dies, I will continue to receive my benefit as well as my spouses.
3. I must be a US citizen to collect benefits.
4. Under the current system the full retirement age is 65.
5. I can continue to work and collect my benefits regardless of my age.
6. I can claim my benefits when I retire, my dependent children may be eligible for benefits.
7. As a divorced person, I can collect benefits based on my ex-spouse’s earnings.
8. Once I start collecting benefits, the amount will never change.
9. Government workers could have their benefits reduced.
10. My spouse can qualify for benefits even if they have no individual earnings history.
Write down your answers before you read any further. Now here are the correct answers with a brief explanation.
1. False – While your benefits are based on your highest 35 years of earnings they are reduced about 6% a year for each year you file a claim prior to your full retirement age. You may claim as early as 62 and defer until age 70.
2. False – You will only receive the higher of your benefit or your spouse’s death benefit but not both.
3. False – As long as you are eligible to work in the US and have a valid Social Security number you will be eligible for benefits provided you are here legally and have 40 quarters of work credits.
4. False – Your retirement age is based on when you were born and is now anywhere between ages 66 and 67.
5. False – If you claim your benefits prior to your full retirement age you will be limited as to what you can earn before your benefits are penalized. After you reach your full retirement age, there are no earnings limitations.
6. True – If you receive benefits and have minor children that qualify they too will receive benefits.
7. True – Provided you were married for at least ten years prior to the divorce and have not remarried you may claim benefits based on your ex-spouse’s earnings.
8. False – Payments can be adjusted for cost of living increases from time to time.
9. True – If you are a government worker and receive a pension your benefits may be reduced.
10. True – A spouse can receive spousal benefits even if they have no individual work history based on the spouse who did accumulate the 40 quarters of work.
If you have any questions or need any additional information on Social Security, please feel free to contact me.
