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 countrymen who are nearing retirement. If you know just about everything about how Social Security works, you’re probably smarter than almost 70% of people approaching retirement age when it comes to understanding one of your main sources of retirement income.
Those are the findings from Massachusetts Mutual Life Insurance Co.’s 2023 retirement benefit quiz from near-retirees. Of the 1,500 people aged 55 to 65 who took the quiz, 69% failed or barely managed to answer the 13 questions. survey (posted in full below). And only 1% managed to answer all questions correctly.
For practical help understanding Social Security, consider matching with a vetted financial advisor for free.
Even more worrying 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 do not know what percentage of their post-retirement income will come from Social Security benefits,” 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’re ready to be matched with local advisors who can help you achieve your financial goals, get started now.
How do you stack? Try the True or False quiz and see for yourself – and you’ll even have an edge over No. 12. (Social Security benefits are not subject to any income tax until you exceed a certain income limit, which is $25,000 for individual tax filers, and $32,000 for joint tax filers.)
2023 MassMutual Social Security Retirement Benefits Quiz
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If I receive benefits before my full retirement age, in most cases they will be reduced due to early filing.
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If I receive benefits before my full retirement age and continue to work, my benefits may be reduced based on how much I earn.
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If I have a spouse, he or she can receive benefits from my file even if he or she has no individual income history.
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If I am in a same-sex marriage, there are generally different requirements to qualify for Social Security retirement benefits.
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If I have a spouse and he or she dies, I will receive my full benefit as well as my deceased spouse’s full benefit.
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The money that comes out of my paycheck for Social Security goes into a specific account for me and stays there, earning interest, until I start receiving Social Security benefits.
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If I am claiming retirement benefits and have dependent children age 18 or younger, they may also be eligible for Social Security benefits.
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If I get divorced, I may be able to collect Social Security benefits based on my ex-spouse’s earnings history.
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Under current law, Social Security benefits could be cut by 20% or more for everyone by 2035.
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According to current social security law, the full retirement age is 65, regardless of your date of birth.
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If I delay receiving Social Security benefits until after age 70, I will continue to receive a deferred increase in the retirement credit each year I wait.
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Social Security retirement benefits are subject to income taxes, just like withdrawals from a traditional IRA account.
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I must be a U.S. citizen to receive Social Security retirement benefits.
