Quiz Put Your Retirement IQ to the Test By the editors of Kiplinger's Personal Finance June 20, 2018 Getty Images What's the biggest threat to a comfortable retirement? Ignorance. The decisions you make leading up to retirement, including how much to save, how to allocate your investments, when to claim Social Security and how to anticipate your retirement expenses, can make a big difference as you grow older. And the decisions don't stop on the day you retire. Once you're in retirement, you'll need smart strategies for taking withdrawals and investing your resources so your nest egg lasts as long as you do. Think you know the ins and outs of retirement? Take this true-or-false quiz to find out. Start Quiz Quiz | Put Your Retirement IQ to the Test Question 1 of 10 Most people claim Social Security benefits before reaching full retirement age. True False Quiz | Put Your Retirement IQ to the Test Question 1 of 10 Most people claim Social Security benefits before reaching full retirement age. True About 44% of workers take the benefit as soon as they are eligible, at age 62, and nearly 75% of retirees take benefits before full retirement age. It's the big decision every retiree needs to make: Should you claim Social Security benefits early, at your full retirement age (currently 66, for worke... Read more ˅ About 44% of workers take the benefit as soon as they are eligible, at age 62, and nearly 75% of retirees take benefits before full retirement age. It's the big decision every retiree needs to make: Should you claim Social Security benefits early, at your full retirement age (currently 66, for workers born between 1943 and 1954), or delay claiming until as late as age 70? If you take benefits as early as possible, you'll see about 25% to 30% less each month than you'd get at full retirement age. If you wait, you'll receive 8% more benefits for every year beyond your full retirement age. Less ˄ False Next Question Quiz | Put Your Retirement IQ to the Test Question 2 of 10 To support your lifestyle in retirement, you'll need 100% of your preretirement income. True False Quiz | Put Your Retirement IQ to the Test Question 2 of 10 To support your lifestyle in retirement, you'll need 100% of your preretirement income. TrueFalse Once you stop working, you won't be paying payroll taxes or socking away income for retirement savings. Other expenses, everything from commuting to dry cleaning costs, may go down or disappear. You may even save money on food, because you'll have more time to compare prices in the grocery aisles an... Read more ˅ Once you stop working, you won't be paying payroll taxes or socking away income for retirement savings. Other expenses, everything from commuting to dry cleaning costs, may go down or disappear. You may even save money on food, because you'll have more time to compare prices in the grocery aisles and to prepare meals at home. Retirement planners generally recommend saving enough to cover 70% to 85% of your preretirement income, but you'll have to estimate your own retirement income and expenses to come up with a formula that's right for you. Less ˄ Next Question Quiz | Put Your Retirement IQ to the Test Question 3 of 10 In comparison to your final salary, your nest egg should be twice as big. True False Quiz | Put Your Retirement IQ to the Test Question 3 of 10 In comparison to your final salary, your nest egg should be twice as big. TrueFalse Assuming you intend to retire at age 67, aim to accumulate savings equal to 8 to 10 times your annual salary. Together with Social Security benefits, that should be enough to replace about 85% of your preretirement income. If you have other sources of income, such as a traditional pension or a part-... Read more ˅ Assuming you intend to retire at age 67, aim to accumulate savings equal to 8 to 10 times your annual salary. Together with Social Security benefits, that should be enough to replace about 85% of your preretirement income. If you have other sources of income, such as a traditional pension or a part-time job, or if you plan to significantly reduce your spending in retirement, then you can get by with saving less. Less ˄ Next Question Quiz | Put Your Retirement IQ to the Test Question 4 of 10 The longer you delay taking Social Security, the more likely you'll be cheated of your fair share. True False Quiz | Put Your Retirement IQ to the Test Question 4 of 10 The longer you delay taking Social Security, the more likely you'll be cheated of your fair share. TrueFalse Quite the opposite. Whether you take benefits early or wait until 70, you'll end up with the same dollar amount before you die, assuming you die at your projected life expectancy (as determined by Social Security actuaries). Thus, if you claim benefits at 62, the earliest you are eligible, you'll re... Read more ˅ Quite the opposite. Whether you take benefits early or wait until 70, you'll end up with the same dollar amount before you die, assuming you die at your projected life expectancy (as determined by Social Security actuaries). Thus, if you claim benefits at 62, the earliest you are eligible, you'll receive a 25% to 30% reduction to account for the actuarial reality that you'll be receiving benefits for a longer stretch of time. If your full retirement age is 66 but you wait until 70, your benefit will be 32% higher because, actuarially, you'll be collecting over a shorter period. Of course, if you die before you reach your projected life expectancy, you'll collect a lower total payout either way, but if you delay claiming until 70 and live well beyond your life expectancy, then the wait will be more than worthwhile. Less ˄ Next Question Quiz | Put Your Retirement IQ to the Test Question 5 of 10 Once you file for Social Security, you can’t change your mind. True False Quiz | Put Your Retirement IQ to the Test Question 5 of 10 Once you file for Social Security, you can’t change your mind. TrueFalse Within 12 months of first claiming your benefit, you can withdraw your application by filing Form SSA-521. You'll need to repay all of the money you received, including any spousal benefits. You can then restart benefits in later years, for a bigger amount. Next Question Quiz | Put Your Retirement IQ to the Test Question 6 of 10 Stocks are great investments when you’re young, but they are way too risky for retirees to own. True False Quiz | Put Your Retirement IQ to the Test Question 6 of 10 Stocks are great investments when you’re young, but they are way too risky for retirees to own. TrueFalse Stocks do carry risk, but given today's longer life spans (a 65-year-old man can expect to live another 19 years, on average; a 65-year-old woman can expect to live another 22), you'll need to invest for growth well into retirement. When you first retire, aim for a mix of, say, 50% stocks and 50% bo... Read more ˅ Stocks do carry risk, but given today's longer life spans (a 65-year-old man can expect to live another 19 years, on average; a 65-year-old woman can expect to live another 22), you'll need to invest for growth well into retirement. When you first retire, aim for a mix of, say, 50% stocks and 50% bonds. Then, gradually adjust your portfolio to become more conservative as you age. Less ˄ Next Question Quiz | Put Your Retirement IQ to the Test Question 7 of 10 Social Security is going broke. True False Quiz | Put Your Retirement IQ to the Test Question 7 of 10 Social Security is going broke. TrueFalse Social Security may eventually fall short of the money it needs to deliver full benefits, but it's not likely to go broke altogether. Here's the deal: Social Security is mostly funded by payroll taxes and ... Read more ˅ Social Security may eventually fall short of the money it needs to deliver full benefits, but it's not likely to go broke altogether. Here's the deal: Social Security is mostly funded by payroll taxes and taxes on Social Security benefits. In recent years, those revenues have not been enough to cover full benefits, so the system has used interest on its reserves to close the gap. The reserves are projected to run out in 2034, at which point tax revenue will generate enough to cover only 79 cents for every dollar of scheduled benefits. Chances are strong that Congress will come up with a way to fix the system before that happens, but, even in a worst-case scenario, you would still receive more than three-fourths of your benefit. Less ˄ Next Question Quiz | Put Your Retirement IQ to the Test Question 8 of 10 You and your spouse should plan on spending more than a quarter of a million dollars out-of-pocket to cover health costs in retirement. True False Quiz | Put Your Retirement IQ to the Test Question 8 of 10 You and your spouse should plan on spending more than a quarter of a million dollars out-of-pocket to cover health costs in retirement. True Medicare doesn't cover everything – far from it. Recent estimates project that a couple who are each 65 and live to their average life expectancies – 84.3 for a man and 86.6 for a woman – w... Read more ˅ Medicare doesn't cover everything – far from it. Recent estimates project that a couple who are each 65 and live to their average life expectancies – 84.3 for a man and 86.6 for a woman – will need $280,000 to cover health care costs in retirement. The good news for retirement savers: Those costs are baked in to formulas for how much you need to save for retirement – say, eight times your final salary. Just be sure to keep those costs in mind as you plan how to spend your nest egg. Less ˄ False Next Question Quiz | Put Your Retirement IQ to the Test Question 9 of 10 If you're short on savings, you can always work longer. True False Quiz | Put Your Retirement IQ to the Test Question 9 of 10 If you're short on savings, you can always work longer. TrueFalse You may not be able to stay on the job even if you want to. Health problems are the biggest reason people find themselves retiring ahead of schedule, according to the Center for Retirement Research at Boston College, followed by involuntary job loss. Older workers generally have more trouble finding... Read more ˅ You may not be able to stay on the job even if you want to. Health problems are the biggest reason people find themselves retiring ahead of schedule, according to the Center for Retirement Research at Boston College, followed by involuntary job loss. Older workers generally have more trouble finding work after a layoff than younger workers. Changes in family circumstances also play a role in retiring sooner rather than later. If your spouse retires before you do or a parent moves into your home, the chances increase that you'll leave the work force before your scheduled departure. Less ˄ Next Question Quiz | Put Your Retirement IQ to the Test Question 10 of 10 If you follow the “4% Rule” for withdrawing from your retirement accounts annually, you'll probably be set for life. No worries about running out of money. True False Quiz | Put Your Retirement IQ to the Test Question 10 of 10 If you follow the “4% Rule” for withdrawing from your retirement accounts annually, you'll probably be set for life. No worries about running out of money. TrueFalse According to this popular retirement-spending strategy, you can safely take 4% of your total portfolio in the first year of retirement and the same amount, adjusted for inflation, every year afterward. But the rule, based on an analysis of returns over a series of 30-year periods starting in 1926, d... Read more ˅ According to this popular retirement-spending strategy, you can safely take 4% of your total portfolio in the first year of retirement and the same amount, adjusted for inflation, every year afterward. But the rule, based on an analysis of returns over a series of 30-year periods starting in 1926, doesn't reflect current and future conditions. Entering retirement in a bear market and taking 4% from your nest egg could cripple your portfolio. Rather than follow the rule blindly, consider lowering the percentage or skipping the inflation adjustment in years when the market performs poorly. On the flip side, you might be able to increase the percentage of your withdrawal when the good times roll. Less ˄ See Results Quiz | Put Your Retirement IQ to the Test Results Next QuizCan You Answer Jeopardy!’s Trickiest Investing Questions? See All Quizzes answer_num=1,2,2,2,2,2,2,1,2,2|answer_text="True","False","False","False","False","False","False","True","False","False"|total_questions=10|url=/quiz/retirement/T047-S001-put-your-retirement-iq-to-the-test/index.html|total_pages=22|page_id=18888|evaltext_num=0|kipad_id=SavingforRetirementQuizzes Advertisement Advertisement Sponsored Financial Content Show comments