They Flunked the Social Security Quiz

The federal government has been sending Social Security checks to retirees for more than 88 years. You’d think that after almost a century of the Social Security program, Americans would have a good grasp of how it works. Over the decades, past research has shown that Americans are painfully ignorant about Social Security. Two recent surveys by the Nationwide Retirement Institute and Mass Mutual have discovered that nothing has changed.

The Nationwide Retirement Institute 2023 Social Security Survey polled adults from four generations—Gen Z, Millennial, Gen X and Baby Boomers.

Question: Social Security is not protected against inflation. True or False?

False. 70% of respondents incorrectly said True. Every year since 1975, except for two years when there was no inflation, Social Security has given an annual cost-of-living-adjustment (COLA). Each year’s COLA is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). It is calculated every October and begins January of the following year. The 2024 adjustment will be 3.2%.

Source: Social Security Administration

Question: Workers pay Social Security taxes on all their income. True or False?

False. 74% of those surveyed said the question was True. FICA, or Social Security taxes, are collected on 6.2% of income up to $168,600 in 2024. You also pay a 1.45% Medicare tax on everything you earn, even if it’s above the FICA limit.

Question: You can undo a claiming decision within the first 12 months. True or False?

True. But 71% of the people surveyed didn’t know that when you sign up for Social Security, you can change your mind in the first 12 months if you think you made a mistake.

Question: If I don’t work at least 35 years, my Social Security benefit will be reduced. True or False?

True. 62% of people didn’t know that they have to work at least 35 years to get their full Social Security benefit.

In the survey, conducted by Mass Mutual, respondents were adults nearing retirement age, between the ages of 55 and 65.

Question: Under current Social Security law, Full Retirement Age is 65 no matter when you were born. True or False?

False. 47% of those surveyed didn’t know that Full Retirement Age IS based on when you were born. Beginning in 1983, Social Security began gradually increasing Full Retirement Age from 65 to age 67.

You can also determine your Full Retirement Age with this calculator from the Social Security Administration.

https://www.ssa.gov/benefits/retirement/planner/ageincrease.html

Full Retirement Age is when a worker is entitled to their full retirement benefit, also known as the Primary Insurance Amount (PIA). Beginning Social Security before your FRA results in a permanent benefit reduction, meaning you’ll receive less than 100% of your PIA. But if you wait past your Full Retirement Age to begin drawing Social Security you receive delayed credits, which gives you a permanently increased Social Security check. Half the people surveyed got that wrong too.

And, Question: If I delay taking Social Security benefits past age 70, I’ll continue to get delayed retirement credit increases each year I wait. True or False?

False. 51% said it was true. The truth is, delayed credits stop at age 70, so there’s no reason to wait past that age to begin taking your benefit.

Disclaimer

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