Considering the fact that almost all of us will one day collect benefits from Social Security, you would think we’d all be familiar with the ins and outs of the program. But in reality, many people are poorly informed on how it works.
MassMutual recently offered a twelve-question, true-or-false quiz for soon-to-be retirees (age 55 to 65) to assess their Social Security knowledge, and the results were surprising. Just over a third of participants failed the test completely, earning a grade of F! And another 18 percent earned a D. Only 3 percent earned an A plus by answering all twelve questions correctly.
If you’re wondering about your own Social Security knowledge, here are nine of the most commonly confused facts:
- Most people cannot live off of Social Security benefits alone. Benefits are expected to amount to 30 to 40 percent of your pre-retirement income.
- Benefits are based upon your 35 highest-earning years.
- When one spouse dies, the surviving spouse gets to keep whichever benefit check was higher. This is why many couples focus on methods to increase the larger check.
- Claiming your own benefit is not always the wisest plan. If your spouse earned considerably more money than you did, spousal or survivor’s benefits might actually amount to more than your own.
- You don’t have to be married to claim spousal benefits. If you were married for at least ten years before divorcing a former spouse, you can claim benefits on their record if you haven’t remarried.
- Social Security benefits are taxable, depending upon marital status and annual income.
- You can change your mind. If you’ve realized you shouldn’t have claimed your benefits early, you can withdraw your application and once again delay benefits until later, but only once..
- If you claim benefits early, some of your benefit can be withheld. This happens if you’re still working and earn above a certain threshold each year. However, you will be credited for the withheld amount later, when you reach full retirement age.
- No, Social Security is not disappearing. There are some anticipated problems with funding the program in the future, yes, but there is no fixed amount of money that is soon “running out”.
Did any of these facts surprise you? That’s okay! Social Security is an incredibly complicated program, and no one is expected to know everything. But you should definitely be familiar with your rights, as well as the methods of increasing your future benefits. Give us a call to discuss this topic in further detail, and we can help you learn how to maximize your retirement income.