June 26, 2015

Polls consistently show that Social Security is among the country’s most popular federal programs. But that doesn’t mean most Americans actually understand how it works.

Most people who answered basic questions about Social Security received a failing grade, according to a new survey from the Massachusetts Mutual Life Insurance Company. To be fair, such an outcome is not entirely unexpected, given that the retirement program remains a complicated system, with its handbook including more than 2,700 entries on topics from remarriage to black lung benefits.

Given that Social Security handles retirement benefits for 56 million Americans — with most seniors dependent on the program for the bulk of their income — it behooves consumers to at least grasp the basics. Only 28 percent of those surveyed received a passing grade when asked about key issues such as the program’s full retirement age and whether an individual must be a U.S. citizen to collect Social Security benefits. Only one person out of the survey’s 1,513 respondents answered all 10 questions correctly.

The risk? That people who don’t understand the system will make unwise decisions, possibly foregoing money they’re entitled to receive.

“Americans who lack the proper knowledge and information about Social Security may be putting their retirement planning in jeopardy,” Phil Michalowski, vice president, U.S. Insurance Group, MassMutual, said in a statement. “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.”

To take the quiz yourself — and check your answers — click here. Read on to learn about five of the most common misunderstandings about Social Security.

U.S. citizenship is required to receive benefits. True or false? If you are like three-quarters of the survey’s respondents, you believe that holding American citizenship is necessary to receive Social Security benefits. But that’s incorrect. Resident aliens (or “green card” holders) may qualify to receive Social Security payments, as long as they meet some additional guidelines, such as having 10 years of work in the U.S. under their belts.

The full retirement age is 65. True or false? More than 7 out of 10 workers said they believe the full retirement age is 65. Again, that’s not correct. While workplace culture pegs retirement at age 65, the Social Security Administration determines your full retirement age — which means the age at which workers can claim full benefits — based on the year of your birth. For people born between 1943 and 1954, the full retirement age is 66. For those born between 1955 to 1959, the full retirement age increases every two months above 66 years old. For people born after 1960, the full retirement age is 67. The risk for workers who get this wrong? Filing before full retirement age means a reduction in monthly benefits.

Continuing to work after retirement regardless of age will crimp your benefits. True or false? More than half of respondents incorrectly believed they could continue to work and collect full benefits regardless of their age. While people can work and receive Social Security retirement benefits, there’s a catch if you haven’t yet received full retirement age: your earnings will be subject to the retirement earnings test. In 2015, that limit was $15,720. People earning above that will have $1 of their Social Security benefits withheld for every $2 of earnings that exceed the limit.

As a divorced person, I can collect Social Security based on my ex-spouse’s earnings history. True or false? Only about four of 10 respondents knew the answer to this question: It’s true. If you were married to your ex-spouse for at least 10 years, are over 62 years old and have not remarried, you are entitled to claim Social Security benefits based on your ex’s earnings. This is a gender-neutral benefit, which means that both men and women can claim for the benefit based on their ex-spouse’s earnings.

If my spouse passes away, I can continue to receive both his or her Social Security benefits as well as my own. True or false? About half of respondents believed this was true, the survey found. That means those people may be making incorrect assumptions about their income during their golden years, since Social Security retirement benefits are only paid while a person is alive. After a spouse dies, a retiree would either receive the greater of their own benefit or their spouse’s, but not both.

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