Retirement Preparation Quiz Results
Category: Retirement 101 Course
February 20, 2019 — By now you have hopefully taken our online “Retirement Preparation Quiz” and seen your score. If you haven’t, you can take it here. Please realize that the original passing score (70%) was chosen subjectively – your opinion of the state of your retirement preparation is undoubtedly better than ours. We hope that by presenting the questions and reasons for the correct answers you can increase your understanding of retirement preparation. Note that for most of the questions we have provided a link to an article on that topic so you can explore it in greater detail.
Notes about the results
Almost 1100 people had taken the quiz as of Feb. 26. The average score for everyone taking the test was about 69%. That prompted us to lower the “passing” grade to 60% (from 70%), since many of the factual questions were difficult. In addition, for some of the questions that had more than 2 choices (e.g.; yes, no, somewhat) more than one answer might be considered acceptable. We have posted the percentage (%) of people who got each question right next the correct answers.
The questions that were most often missed were #3 and #8. Number 3 asked which of three investments had the best guarantee of income. Only 39% selected the “correct” answer, annuity, probably because people didn’t realize the key word was “income”, and assumed we meant “return”. Number 8, age of breakeven for delaying SS until age 70, was answered correctly by only 34%. We can see why, because not all experts agree on the consensus answer of 81-82. All of the questions we asked about progress on preparation and/or discussion with spouse/family members had strong results, usually 80% or better. That is good news, indicating that there is a lot of planning and discussing going on. Somewhat distressing were the responses to questions 9 and 10 on wills and health care directives. Almost one third of quiz takers do not have one or the other of those, so it is time for them to get busy on those important tasks. Only about half (53%) have spent time thinking about “late” retirement. The questions with the highest % of correct answers were those that had to do with planning on what type of community or home they want to live in – 90% or more said they had.
Question 01
What is the average life expectancy of a woman and a man aged 65 years?
90 and 86
87 (woman) and 84 (man) – Correct (64%)
80 and 77
Comment: If you manage to live to the age of 65 you still have a long way to go – on average! This is a good thing to know when you consider when to take Social Security and budget your retirement – outliving your money is not pleasant. (Note: We added the age of a woman to this question following a Member suggestion).
Comments on "Retirement Preparation Quiz Results"
jean says:
Regarding Q 3 "Which of these investment options usually provides the best guarantee of future income?" The comment at the end "A good annuity should deliver a promised amount without the risk of stocks or mutual funds" overlooks the risk of inflation. Even a low inflation rate adds up over time and what was a comfortable income suddenly isn't anymore Although not an option for this question balanced investments that include some part aimed at growth would be safer over time.
Admin says:
Thanks for the feedback Jean. I agree, balanced investments of stocks, bonds, and fixed income (such as annuities or even a little cash) is a great strategy, particularly against inflation. The point of the annuity question it is one of the few things that has a reasonable "guarantee" of income (income was a key word in the question). Most experts wouldn't want to see a portfolio comprised completely of annuities.
Barbara E. says:
It makes no sense for a single woman to need to know the answer to how long a man is expected to live and to figure that response into some sort of "ready for retirement" score. And that is just your first question.
In addition, other questions, such as #19, do not have ONE correct answer. Too many of these questions are subjective and apply only to an individual's personal situation but have nothing to do with that individual's "readiness" for retirement.
Editor's comment: Thanks for the suggestion Barbara. We added life expectancy for a woman to question 1. Regarding choices with more than one "correct" answer, the software limited us to one "correct" answer. But on the answer page we acknowledge that in many cases it is not incorrect to have selected something like "we have visited a few communities".
John says:
To Jean's concern about inflation impacting cost of living, many annuity companies offer inflation protection for annuity payouts. In most case they cost more but if inflation is a major concern, an inflation protected annuity is still a safer (meaning guaranteed risk-free income for life) option over any length of time. Even the best of "well balanced" portfolios sometimes lose money. The key word in the question being "guarantee." Of the choices given none but annuities can actually "guarantee" future income.