Social Security Test

Eight simple questions about Social Security should be answered correctly by most people.


Unfortunately, however, only 1 of 20 adults taking the test can do so.


Can you pass a Social Security test? has the questions and correct answers:


"How much do you know about Social Security? If you’re like most Americans, the answer is: not much.

This pessimistic conclusion comes from Financial Engines, a Sunnyvale, Calif. company that manages 401(k) accounts and IRAs on behalf of people who want investment help. When the company administered an eight-question quiz about Social Security to about 1,000 people ages 55 to 70 in October, almost three-quarters got a grade of “C” or lower (meaning they got six answers or fewer correct) and only 5% received perfect scores.


(You can test your knowledge by taking the quiz here.)


The takeaway: “Americans aren’t very well informed about how Social Security works,” says Chris Jones, chief investment officer at Financial Engines. And the stakes are high, since these benefits comprise 90% or more of the retirement income of a quarter of all American couples and half of single individuals. . . .


Picking the right strategy can make a big difference in a retiree’s wealth. For a single individual, a wise choice can inflate lifetime retirement income by as much as $100,000. For couples, an optimal strategy can add $250,000 or more of benefits over a lifetime. Given that the average 401(k) balance for a worker in his or her 60s is only about $125,000, maximizing Social Security is key, notes Jones.


For many people, it pays to defer Social Security. For every year you wait between age 62 (when you first become eligible) and age 70, benefits rise by 6% to 8%. Because Social Security benefits are also adjusted for inflation, delaying “is a screamingly good deal,” says Jones. “The government is giving you a 6% to 8% guaranteed real return” for every year you delay claiming, “which is vastly higher than the return rates we see in the economy today” for investments with a comparable low risk, he says. (For some people, including those who are single and have a short life expectancy, it may not pay to wait.)


While delaying taking benefits until age 70 is optimal, “delaying Social Security for even one or two years can make a big difference in household retirement income, and especially for the surviving spouse,” he says."


Summing Up


I hope you answered each of the eight questions correctly and received 100 on the test.


But even more important, I hope that you will make the effort to become sufficiently knowledgeable and 'financially literate' to save and invest responsibly for your retirement years.


DIY is the absolute best way for each and all of us, but first we need to acquire the requisite knowledge to make good financial decisions on behalf of ourselves and our families.


Thanks. Bob.