Financial Advisor Social Security Challenge

By Bruce Starks, CPA, CFP® | June 8, 2021

The Challenge

Social Security benefits are key to most Americans’ quality of life during retirement. Yet, an alarming number of clients approaching retirement do not have a basic understanding of Social Security benefits. Twelve fundamental questions were posed to 1,5001 pre-retirees to gauge their Social Security knowledge. Take the same true/false survey quiz below to see how well your understanding stacks up against the pre-retirees surveyed.

Social Security Quiz

  1. If I claim [retirement] benefits before my full retirement age, they will be reduced for early filing.
  2. If I am receiving [retirement] benefits before my full retirement age and continue to work, my benefits might be reduced based on how much I make.
  3. Once I start collecting Social Security benefits, my benefits will never change.
  4. If I have a spouse, he or she can receive benefits from my record [of earnings] even if he or she has never paid any Social Security taxes.
  5. If I have a spouse and he or she passes away, I will receive both my full [retirement] benefit and my deceased spouse’s full [retirement] benefit.
  6. The money that comes out of my paycheck for Social Security taxes goes into a specific account for me and remains there, earning interest, until I begin to receive Social Security benefits.
  7. Under current Social Security law, full retirement age is 65 no matter when you were born.
  8. As a divorced person, I might be able to collect Social Security benefits based on my ex-spouse’s earnings history.
  9. Under current law, Social Security [retirement] benefits could be reduced for everyone in 2035.
  10. My dependent children under age 18 may qualify for Social Security retirement benefits if I have claimed Social Security retirement benefits.
  11. If I delay taking Social Security [retirement] benefits past the age of 70, I will continue to get delayed retirement credit increases each year I wait.
  12. I must be a U.S. citizen to collect Social Security retirement benefits.

Answers

  1. True – Benefits can generally be claimed as early as age 62 but will be permanently reduced by as much as 30%.
  2. True – But the reduced benefits will be paid if the retiree lives long enough.
  3. False – A cost of living adjustment will be added for any year in which inflation occurs.
  4. True – A qualifying spouse with no earnings record can generally receive a benefit of as much as 50% of the amount paid to the spouse with an earnings record.
  5. False – The surviving spouse generally receives the greater of his/her benefit or 100% of the deceased spouse’s benefit, but not both.
  6. False – There is no separate account holding a worker’s Social Security taxes paid and there is no interest paid to the worker.
  7. False – This age ranges from age 65 to 67 depending upon the worker’s year of birth. The normal retirement age for most of the post-Baby Boomer generations is age 67.
  8. True – A divorced spouse can receive as much as 50% of their former spouse’s benefit.
  9. True – Retirement and survivorship benefits will be reduced by approximately 25% in 2035 without changes to current law. Disability benefits (a separate Social Security program) are funded through 2065.
  10. True – The worker’s dependent children under age 18 are generally eligible for retirement benefits if the worker has claimed a benefit.
  11. False – There is no reason to delay the claiming of retirement benefits beyond age 70.
  12. False – A legal immigrant with sufficient earnings may qualify for benefits.

Assessment

Quiz Assessment
Number of Questions Correct Feedback
12 You are better informed than 97% of the pre-retirees surveyed.
8 or more You are better informed than 50% or more of the pre-retirees surveyed but we recommend additional training before discussing Social Security with clients.
Less than 8 Be very cautious in discussing Social Security with clients until you have received training in Social Security benefits and requirements.

If you would like more information on GCA’s Social Security competency resources contact David Greene at 404-324-4600 or via email at davidgreene@greeneconsults.com or Rick Swygman at rickswygman@greeneconsults.com.

1 Sergeant, Jacqueline (2021, April 7). Most Near-Retirees Miserably Fail Basic Social Security Quiz. Retrieved from https://www.fa-mag.com/news/near-retirees-miserably-failed-basic-social-security-quiz-61343.html

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About Bruce Starks, CPA, CFP®