CNBC has a Social Security quiz that it says half of all Americans can't pass. However, the CNBC quiz has some problems. One of their own answers is clearly wrong (the last one) and one of the other questions (the next to last one) is, in my opinion, misleading or, at the least, so out of date that they shouldn't be asking it. Come on, FERS has covered all new federal employees since 1986, for goodness sakes! Also, they describe their quiz as having five questions but there are actually ten. Other than that, great job, guys.
Phew! I got 10 out of 5 right!
ReplyDeleteThe quiz is not great for determining if people know enough about Social Security. Why is it important for people (except for eligible non-citizens, of course) to know whether only citizens can collect benefits? It's also not important for people to know what "primary insurance amount" is - the term isn't even used on the Social Security statement. The question on whether benefits are reduced if you take them at 65 is ambiguous - reduced relative to what? What they mean is relative to the amount at NRA, but why should people even care about their NRA - the important point is that the later one starts benefits, the higher the benefits (up to age 70), which most people know. NRA matters to those who want to collect Social Security while still working, but other than that, it's just another point on the 62-70 scale.
ReplyDeleteThere are also important things not covered on the quiz. One is that benefits are determined by the 35 years with the highest income (relative to the average). So if one's relative income is fairly constant, after 35 years the additional amount earned with each extra work year goes down a lot. Earning extra Social Security is often mentioned as a reason to work longer, but that is not always true.
A9:11's point about work after 35 years is not strictly accurate. With the fact that the maximum earnings on which FICA taxes were paid in earlier years was quite low, even considering indexing for inflation, it is very possible that FICA earnings in 2018 would be higher than, say, 1980 -- if so, 2018 earnings could supplant 1980 earnings, raising the average monthly wage for the PIA. To be more succinct, higher FICA earnings now can raise the PIA.
ReplyDeleteRE question 9--answer seems correct to me. Some government workers will be subject to offset--not many Federal employees but teachers, city employees, etc may be offset.
ReplyDeleteRe question 10 that is incorrect. I supposed they want retirement to mean aux spouses benefits but it could have been worded better.