How much do pre-retirement Americans know about the basics of Social Security? Not much, according to a new report.
Life insurance company MassMutual recently gave an online Social Security quiz to 1,500 Americans approaching retirement, and most didn’t pass or barely passed. Not only did this year's respondents score lower than those in 2022, close to a third said they don’t even know how much money they’ll need to sustain them in their retirement years.
What the data says
Most pre-retirees — defined in this poll as workers age 55-65 — need to hit the books when it comes to their retirement and Social Security knowledge: More than a third (35%) failed the 13-question test, and another 34% passed by the skin of their teeth with a "D" grade.
- While 55% of pre-retirees knew that Social Security benefits could be reduced by 2035, 42% plan to rely on them as their primary income source in retirement.
- About the same percentage said they don’t know how much of their retirement income will come from Social Security.
- Roughly a quarter of pre-retirees said they think their income can last them 10 or fewer years in retirement.
- At the same time, when asked how much money on top of Social Security they think they’ll need to retire comfortably, 28% said they don’t know. A quarter estimated they’ll need an additional $1 million to bankroll retirement.
Keep in mind
And even fewer (77%) knew that if they receive benefits prior to full retirement and keep working, their benefits may be reduced according to their earnings.
Retiring in the U.S. is considerably more uncertain and expensive than in years past — a 2020 study found that over 30% of workers across age groups don’t expect to receive any Social Security benefits. What’s more, recent reports predict that Social Security will run dry, and be unable to pay out 100% of benefits, a year earlier than previously estimated.
But avoiding the issue won’t help pre-retirees navigate their post-work finances. Americans nearing retirement need to have a plan in place and know where their income is going to come from, according to MassMutual.
“There are two key things to remember when it comes to retirement: Knowledge is power, and planning is powerful,” Paul LaPiana, head of product at MassMutual, said in a news release. “Make decisions on purpose and not by accident.”