Social Security is a simple concept. You pay Social Security taxes while you work, and when you retire, you receive payments for the rest of your life. However, as with any government program, there is a complex web of regulations and requirements surrounding Social Security.
To help you better navigate the maze of Social Security, GOBankingRates developed a quiz to see how much you know about the program — and how much more you might need to learn. Take this Social Security quiz to find out if you're really ready for retirement.
1. When Is the Best Time to File for Social Security?
a) As early as possible (currently, age 62)
b) At “full retirement age” (currently, age 66 to 67, depending on your birth year)
c) As late as possible (currently, age 70)
d) It depends
This question is probably the most debated question of all when it comes to Social Security. Which one is the right answer? Click through to see.
Find Out: How to Apply for Social Security
Answer: d) It depends
There are numerous reasons to claim Social Security early. For starters, you get your money sooner rather than later. If you don’t plan on living a long life, you might be ahead of the game by taking your money sooner. If you’re married, you can make a plan where one spouse claims early and the other claims later.
The earliest you can claim your Social Security benefits is age 62. However, if you can wait, your benefit will increase by as much as 8 percent every year that you delay, up to age 70.
2. When Will Social Security Stop Paying Benefits?
a) In 2020
b) In 2035
The future of the Social Security trust fund is a worrying concern for many Americans, especially in the face of ominous reports in the press about its solvency. So, when exactly will this hallowed American institution run dry?
Answer: c) Never
This is a bit of a trick question, but the idea that Social Security one day will stop paying anything at all is one of the biggest Social Security myths out there.
True, the Board of Trustees of the Social Security Trust Fund project that funds will be depleted in 2035. However, there will still be millions of workers paying Social Security taxes to fund the program. Without any changes, the Trustees project that Social Security will still pay 75 percent of its benefits — even if the trust fund goes to zero in 2035.
3. How Should I Maximize Income in Retirement?
a) “File and suspend”
b) Delay filing for retirement benefits
c) Continue working in retirement
d) None of the above
These all seem like viable options for maximizing your retirement income. Let’s take a look at which is the most prudent.
Answer: d) None of the above
Under “file and suspend,” also called “deemed filing,” the Social Security Administration allowed workers to file for a retirement benefit and then immediately suspend it, earning a spousal benefit while their own retirement benefit grew every year. That loophole was closed in 2015, so (a) is no longer an option.
Under option (b) filing later, you’re guaranteed to receive a higher payment for the rest of your life — but you won’t receive it until age 70. Working in retirement can be an option, but it can also reduce your Social Security payments or make them taxable, so it’s not a sure answer either.
Keep Reading: 7 Reasons You Could Get Less Social Security
4. When Can I File for Social Security?
a) Age 62, but only if retired
b) Age 62, but only if still working
c) Age 62, 67 or 70
d) Any age from 62 to 70
Some workers think they should file for Social Security the day they retire. Others think there is a specific age that is required. So what’s the answer? Click through and see.
Answer: d) Any age from 62 to 70
Age 62 is the earliest that anyone can file for Social Security. Currently, between age 66 and 67 is “full retirement age,” when the standard benefit is paid. Age 70 is the latest age that a worker can file.
However, you are permitted to file anytime between age 62 and 70, whether you are working or not — although your benefit might be affected if you’re not retired.
5. Can My Spouse Earn Social Security Benefits If He or She Never Worked?
a) Yes, even if I didn’t qualify for Social Security
b) Yes, but only if I qualified for Social Security
c) No, unless I qualified for Social Security
d) (b) and (c) only
Spousal benefits are an important part of the Social Security equation. But how does a spouse qualify? Does working status play a role? Click through to find out.
Answer: d) (b) and (c) only
A spousal benefit is meant for the spouse of a working taxpayer. A spouse’s benefit is up to 50 percent of the primary taxpayer’s benefits, so if you don’t qualify for retirement benefits, your spouse doesn’t qualify for spousal benefits.
Write This Down: Changes to Social Security Spousal Benefits You Need to Know
6. Can Upcoming Changes to Social Security Affect Me?
a) No, once you file, your benefit is not subject to change
b) Yes, if I have already filed and there is an inflation adjustment
c) Yes, if I am still working I might be subject to more tax
d) Both (b) and (c)
Social Security is the subject of constant attention, from consumers and politicians alike. Many ways to fix or change Social Security are often bandied about, so do you need to worry about changes to your Social Security payments, either before or after you file? Let’s find out on the next page.
Answer: d) Both (b) and (c)
Your benefit payments can always increase due to the cost-of-living adjustment tied to inflation, making (a) false and (b) true.
However, if you’re still working, you might be subject to more tax if the Social Security tax base is increased. In 2018, for example, you’ll pay Social Security taxes on earnings up to $128,700, up from $127,200 in 2017.
7. Does My Social Security Payment Get Adjusted Annually?
a) Yes, if there’s a cost-of-living adjustment
b) Yes, if the Social Security Trust Fund earns additional income
c) No, my payments are fixed for life
For many Americans, Social Security is a prime source of retirement income. But does that income ever go up, or are you stuck with what you're getting now for the rest of your life? Make your choice and see the answer.
Answer: a) Yes, if there’s a cost-of-living adjustment
The Social Security Trust Fund isn’t a mutual fund, where you get paid more if the fund has a good year; nor do you benefit if more workers flood the market and pay more in Social Security taxes. However, you will benefit from occasional cost-of-living adjustments, based on the rate of inflation. For 2018, for example, benefits will rise 2 percent.
8. Will I Get Paid Back the Same Amount in Retirement That I Put in While Working?
a) No, you will receive more
b) Yes, what you pay in is what you receive back
c) No, you will receive less
d) It depends on how long you live
Social Security seems like a simple concept — you put money in the trust fund over the course of your life. When you retire, you get paid that money back. But is that how it really works? See the next slide for the answer.
Answer: d) It depends on how long you live — but a) is usually also true
Take a look at this sample calculation: If you earn $50,000 a year for 30 years, you’ll be paying $3,100 per year in Social Security taxes, or $93,000 overall. At that level of career earnings, you’ll qualify for a Social Security benefit of $1,846.74 per month if you start taking benefits at age 66 years and 2 months. After just over 50 months, you’ll have received back more than you put into Social Security — $94,183.74.
Take A Look: The One Social Security Mistake You Can Easily Avoid
9. Can My Benefits Be Reduced After I File?
a) Yes, if you continue working and are younger than the full Social Security retirement age
b) Yes, if the Social Security Trust Fund becomes insolvent
c) No, your payments are guaranteed
d) Both (a) and (b)
So, once you file for Social Security, you are home-free, right? Maybe, maybe not. Can things change after you file for your benefits? Make your choice, and find out the answer on the next slide.
Answer: d) Both (a) and (b)
If you work after you file and have not yet reached full retirement age, Social Security will dock your payments by $1 for every $2 you earn above the threshold level, which is $16,920 as of 2017. If the Social Security fund becomes insolvent, your benefits won’t go to zero. But because there will be less money to pay benefits, your benefit is likely to be reduced.
10. Are My Social Security Benefits Taxable?
c) Yes, but only if you earn above a certain amount
When you get paid wages or a salary, you expect to pay income tax on those earnings. But Social Security is just returning your tax payment you have already made, so they can’t be taxable, right? Make your choice, and check out the answer.
Answer: c) Yes, but only if you earn above a certain amount
The good news is that no matter how much you earn, you won’t pay tax on more than 85 percent of your Social Security payments. The bad news is that if you earn more than $34,000 as an individual, or more than $44,000 as a couple filing jointly, you will pay tax on 85 percent of your Social Security benefits. To pay no tax at all, you’ll have to earn less than $25,000 or $32,000, respectively.