Near-retirees still have a lot to learn about Social Security retirement benefits and may be leaving money on the table, according to a new consumer poll released Tuesday by Massachusetts Mutual Life Insurance Co.
Nearly half (47%) of Americans age 50 and older failed a basic five-question true-false quiz on Social Security retirement benefits. Three years ago, when MassMutual surveyed the nation with a broader 10 question true-false quiz, 62% of respondents age 50-plus failed.
This year's survey was conducted in March via an online survey among 1,007 Americans 50 and older. The previous survey, also online, was conducted in February and March 2015 among 1,513 American adults. A failing score is 60% or lower.
"There's improvement, but the scores are still alarming," said Mike Fanning, head of MassMutual U.S. "For many, thousands of dollars could be left on the table at a time when it really counts."
Another recent survey by the Nationwide Retirement Institute produced similarly dismal results about near-retirees' lack of knowledge about the nation's retirement system. In the Nationwide survey, nearly nine in 10 respondents age 50 or older did not know what factors determine the maximum Social Security benefit an individual can receive.
Social Security benefits are based on the top 35 years of indexed earnings. Every year that someone continues to work — even after full retirement age or after claiming benefits — the Social Security Administration continues to review their earnings record. If current earnings are higher than one of the previous years used in the benefit calculation, future benefits could increase. Only earnings up to the annual taxable wage base — currently $128,400 — count toward future benefits.
For individuals with spotty work histories that contain some zero-earnings years, continuing to work beyond traditional retirement age can substantially boost future Social Security benefits. But for workers with more than 35 years of covered earnings, particularly long-time high-income earnings, continued employment may not make a huge difference in future benefits.
Want to see how much you know about Social Security retirement benefits? Here are the latest MassMutual quiz questions and results.
• Under current Social Security law, my benefits will not be reduced if I claim them at age 65. False. 49% answered correctly.
• My spouse is eligible to receive Social Security retirement benefits, even if he or she has no individual earnings history. True. 54% answered correctly.
• If my spouse dies, I will continue to receive both my own benefit and my deceased spouse's benefit; the total Social Security benefits I receive will not change. False. 80% answered correctly.
• Social Security retirement benefits are based on my earnings history; I'll receive the same monthly benefit amount whether I start collecting before or after my full retirement age. False. 83% answered correctly.
• If I am still working when I claim my Social Security, my benefit might be reduced, depending on my earnings and my age. True. 85% answered correctly.
What else has changed since MassMutual's last nationwide poll in 2015? The Social Security Administration stopped mailing Social Security statements to those under the age of 60, which means the only way to access information is online.
To take a pulse check to see whether near-retirees were paying attention, MassMutual asked: "Have you created an account on the Social Security Administration website to view your earnings history to ensure it is accurate now that the administration no longer mails statements to people under the age 60?"
A whopping 86% of those ages 50 to 59 who are affected by this change answered no, they have not created an account yet. Of the total pool surveyed of those age 50-plus, the majority (60%) have not created an account yet.
So what's the risk? Not only can establishing an account help ensure that your Social Security retirement benefit calculations are accurate, it can also help with identity theft protection because only one account per Social Security number is allowed.
"Near-retirees have the power and responsibility to ensure that they protect and receive every dollar they deserve in Social Security retirement benefits when the time comes," Mr. Fanning said.
Once you create a Social Security online account, you can check your estimated retirement benefits at various claiming ages and verify that your earnings history — which is the basis for those future benefits — is accurate and up to date.