SPRINGFIELD, Mass. – Results from a new true/false quiz reveal that only 28% received a passing grade when asked basic questions about Social Security retirement benefits.
On June 15, Massachusetts Mutual Life Insurance Company (MassMutual) announced the results of a survey aimed to better understand how much Americans know about Social Security retirement benefits.
While just 1 in 4 having even a basic understanding of this important benefit is disturbing, also troubling is that when asked about their level of knowledge about Social Security retirement benefits, only 8% of those surveyed consider themselves to be very knowledgeable. And that perception mirrors reality. Nearly all surveyed hold at least one misperception about Social Security – only one survey respondent answered all true/false questions correctly.
• To test your Social Security IQ, take the MassMutual quiz
“Perhaps the greatest Social Security deficit in this country is the lack of education around the retirement benefits of the program, which presents an opportunity and responsibility to financial professionals,” said Michael R. Fanning Executive Vice President, U.S. Insurance Group, MassMutual. “With millions of Americans nearing retirement each year, many may be at risk of underutilizing a critical component of their retirement income stream.”
The findings also show gaps in knowledge about Social Security eligibility, which may have a negative impact on planning and saving for retirement:
- Citizenship is not a requirement: Three-quarters of survey respondents think that being an American citizen is necessary to receive Social Security retirement benefits, which is incorrect.
- Retirement age is a mystery: More than seven in 10 surveyed (71%) incorrectly believe that full Social Security retirement age is 65, when the age actually varies depending on birth year.
- Continuing to work and age affect benefits: More than half of those surveyed (55%) incorrectly believe that they can continue working while collecting full Social Security retirement benefits regardless of their age.
According to the research, Americans remain optimistic about the future of Social Security. More than three out of five surveyed (63%) believe Social Security will be available to them when they retire, with a quarter of those surveyed strongly holding that belief. However, less than half (45%) think the program will have sufficient funding when they retire. This may be why only 39% expect to rely more on Social Security than their personal savings or income in retirement, with just 15% expecting to rely solely on Social Security.
“Americans who lack the proper knowledge and information about Social Security may be putting their retirement planning in jeopardy,” said Phil Michalowski, Vice President, U.S. Insurance Group, MassMutual. “In fact, many may be leaving Social Security retirement benefits they’re entitled to on the table, or incorrectly assuming what benefits may be available in retirement.”
U.S. Hispanics have big misconceptions
The survey also included Hispanic respondents, and 47% of them answered more than half of the basic questions about Social Security retirement benefits incorrectly. Only 11% consider themselves to be “very knowledgeable” about Social Security retirement benefits.
“As the Hispanic population in the U.S. continues to grow, so does the need for a solid understanding of the role that Social Security will play in their personal retirement plans,” Fanning said.
While many Hispanic respondents understand basic facts about Social Security retirement benefits, the findings show larger gaps in knowledge of eligibility requirements:
• Over three-quarters of Hispanic respondents (77%) think that being an American citizen is necessary to receive Social Security retirement benefits, which is incorrect.
• Nearly four in five Hispanic respondents (79%) incorrectly believe full Social Security retirement age is 65, when it actually varies depending on birth year.
• More than half (53%) of Hispanic respondents incorrectly believe that if their spouse passes away, they will continue to receive both their own benefit as well as their deceased spouse’s benefit. In reality, assuming qualification criteria is met they would receive the greater of their own benefit or their spouse’s benefit, but not both.
Still, Hispanics remain optimistic about the future of Social Security. Seven out of ten Hispanic respondents (71%) believe Social Security will be available to them when they retire, compared to 63% of the general population. But, only half (52%) think the program will have sufficient funding when they retire. This may explain why just one-fourth expect to rely more heavily on Social Security than their personal savings or other sources of retirement income, with 6% expecting to rely on Social Security alone.
MassMutual offers an educational guide for individuals to help make the most of your Social Security retirement benefits. Additional information is also available from the Social Security Administration.
• To test your Social Security IQ, take the MassMutual quiz
Methodology: The research was conducted by KRC Research on behalf of MassMutual from Feb. 26 to March 2, 2015 via an online survey among 1,513 Americans (1,000 non-Hispanic age 25 to 65; 513 Hispanic age 18+).
About MassMutual: Founded in 1851, Springfield, Mass.-based MassMutual is a leading mutual life insurance company that is run for the benefit of its members and participating policyowners. For more information, visit www.massmutual.com.
