October 28, 2020 — Thank you for taking our 2020 Social Security IQ Test. We hope you found it useful. (If you haven’t taken it yet, here is the link). Please find below a detailed summary of all the questions and answers, along with an explanation of each correct response to this Social Security text. So far 500 people have taken the latest version; over 10,000 people have taken previous versions. We hope even more take it to advance their Social Security education.
Note: most of the links provided in these explanations about Social Security questions go to excellent advice on the SSA.gov website. The correct answer in each case is indicated in bold either by a ? or a check mark.
Conclusions – Underestimation most frequent kind of incorrect Social Security answer
Of the 500 people taking the Social Security IQ test so far the average score is 64% (we set 60% as the passing score). There were 3 questions that 80% or more folks got right: Full Retirement Age (#1), collecting on the benefits of a divorced spouse (#10), and withdrawing your application within 12 months (#11). There were 4 questions which most people could not answer correctly. Unfortunately, these were mostly questions that are important for Social Security recipients to know.
Underestimating your Social Security benefits will cost you money
The Social Security questions that most people missed had to do with:
-How many years are used to calculate your benefit
-How much your benefit will increase if you wait to claim past your Full Retirement Age (FRA) and the difference between claiming at age 62 vs. 70
-And when a spouse can collect their full spousal benefit.
Unfortunately, underestimating how much they could get by delaying their benefits instead of taking them at the first opportunity could cost them and their spouses a lot of money down the road.
- Assuming you were born in 1960 or later, what is considered your Full Retirement Age for Social Security benefit purposes? (The rest of the questions in this quiz assume you were born in 1960 or later, unless otherwise specified).
Comment: “Full Retirement Age” is when you are eligible for your full Social Security benefits without penalty. For those born between 1943 and and 1954, it was age 66. For those born in 1955 and later the FRE increased 2 months per year, until for those born in 1960 and later, it became age 67. But you can actually qualify for “more than full” and get a larger benefit at any age up to 70. (See Full Retirement Age Chart). 80% got this correct.
2. How does the Social Security Administration calculate your benefit?
- Social Security calculates your average indexed monthly earnings during the 25 years in which you earned the most.
- Social Security calculates your average indexed monthly earnings during the 30 years in which you earned the most.
- Social Security calculates your average indexed monthly earnings during the 35 years in which you earned the most.?
Comment: Most people underestimated the number of years used in the calculation. The point is, the more years you maximize your earnings in, the higher your benefit. To earn any benefit, the minimum number of earning quarters is 40. If you had some years of low earnings or you were out of the workforce for an extended period, it might be worthwhile to work longer and boost your calculation. Only 46% got this right, most choosing a shorter period.
3. Assuming you claim your SS retirement benefits at age 62, by what % will your Full Retirement Age benefit be reduced?
Comment: If the number of reduction months is 60 (the maximum number for retirement at 62 when normal retirement age is 67), then the benefit is reduced by 30 percent. This maximum reduction is calculated as 36 months times 5/9 of 1 percent plus 24 months times 5/12 of 1 percent, See Reduced Benefits. 62% got this one right.
4. Assuming you wait to claim Social Security past your FRA, which of these statements is most correct?
- Your benefit will be the same as at your Full Retirement Age (FRA)
- Your benefit will increase 4% per year up until age 70
- Your benefit will increase 8% per year up until age 70?
- Your benefit will increase 6% per year up until age 70
Comment: Your benefit increases by 8% for each year you postpone past your Full Retirement Age (up to age 70). So delaying 3 years your benefit will be 124% higher (for those with an FRA of 66, the increase is 132%). Only 52% answered this correctly, with most people underestimating the annual percentage increase.
5. What is the difference in the benefit for taking it when first eligible (62) vs. waiting until the maximum benefit is available (70)? This question assumes you are a person eligible for a Full Retirement Age at 66.5 with a Social Security monthly benefit of $2000.
Comment: If you missed this question, don’t feel so bad. Only 40% of test takers have gotten it right so far. Most people do not seem to realize the sizable difference in monthly benefits if you claim as early as possible (age 62), your FRA, or age 70. If you can afford to wait and have at least an average life expectancy, it is usually a good idea to delay. See SSA’s calculator for determining how early claiming will affect your situation. Less than half (44%) knew the right answer, with the balance underestimating the monthly difference.
6. If you are still working, receiving Social Security, and not yet at your Full Retirement Age, which of these statements is true?
- $1 of every $2 of earnings over $18,690 will be withheld until you reach your FRA?
- The amount you earn will be deducted from your monthly benefit
- $1 of every $3 of earnings over $18,690 will be withheld until you reach your FRA?
- The amount you earn will not be deducted from your benefit
Comment: If you continue to work after taking early benefits, $1 of every $2 of earnings over $18,690 will be withheld until you reach your FRA. In the year you reach your FRA the limit is higher, $50,520, and only $1 of every $3 is withheld. After you reach your FRA nothing is withheld. SSA has a Calculator to determine how much your benefits might be reduced. 68% got this correctly.
7. True or False: If some of your benefits are withheld because your pre-Retirement Age benefits were too high, you will never get that money back.
Comment: If some of your retirement benefits are withheld because of your earnings,
your monthly benefit will increase starting at your full retirement age to
take into account those months in which benefits were withheld. If your earnings increase your 35 averaged indexed earning years, your benefit will also be increased. 59% passed this one.
8. How much can you receive as as a spousal benefit based on your spouse’s Social Security record?
- 50% if you start collecting at your Full Retirement Age?
- 50% as long as you are at least age 62
- You cannot receive a spousal benefit unless you qualify on your own contribution record
Comment: Your full spouse’s benefit could be up to one-half the amount your spouse is entitled to receive at their full retirement age. If you choose to begin receiving spouse’s benefits before you reach full retirement age, your benefit amount will be permanently reduced. Only 51% knew the correct answer, and if they acted on that knowledge, would get a much smaller benefit than they would have by waiting.
9. As the surviving spouse of someone who qualified for Social Security benefits, what are your benefits?
- You continue to receive your own benefit only, plus a death benefit.
- 75% of your spouse’s benefit upon his or her death, assuming you are at your Full Retirement Age
- 100% of your spouse’s retirement benefit upon his/her death, assuming you are at full retirement age?
Comment: A widow or widower, Full Retirement Age or older, is eligible for 100 percent of the deceased worker’s benefit amount. You can also receive a benefit if you are at least 60 years old. Most folks got a passing grade here.
10. Can you collect benefits as a divorced spouse on the record of your former spouse? Assume that you are divorced from someone who qualifies for social security benefits. You are at least 62, and have not remarried.
- Yes – but only if your former spouse has not remarried
- Yes – but only if you were married to that person for 10 years or more?
- Yes – but only if you were married to that person for 5 years or more
Comment: If you were married for at least 10 years you can receive a spousal benefit on your divorced spouse’s record, if you have not remarried. Family Benefits. The average score on this question was 80%.
11. True or False: If you change your mind about starting your benefits, you can cancel your application for up to 12 months after you became entitled to retirement benefits.
Comment: True: This process is called a withdrawal. If you change your mind about starting your benefits, you can cancel your application for up to 12 months after you became entitled to retirement benefits. You can reapply later. See: Withdrawal of your application. The average score on this question was 80%.
If you cannot withdraw your application and you have reached full retirement age but are not yet 70, you can ask us to suspend benefit payments.
12. Which of these statements from the latest Social Security Trustee Report about the financial health of Social Security is TRUE?
- In 2035 only 75% of promised retirement benefits will be available to be paid?
- All promised benefits will be paid for the foreseeable future
- In 2025 only 52% of promised retirement benefits will be available to be paid
- In the next 20 years Social Security will be bankrupt and no benefits will be paid
Comment: With this projection benefits could still be paid, but only at about 75% of what was promised. If Washington were to make some changes soon, this situation could be changed. Most everyone (72%) got a passing grade on the 2035 benefits reduction.
For further reading:
Now that you are smarter, take the 2020 Social Security IQ Test again!
Take the 2018 Social Security IQ Test (some figures might be slightly out of date, but most questions still apply)
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