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Most Adults Fail This 5-Question Quiz on Retirement Basics
By Mary Ellen Cagnassola MONEY RESEARCH COLLECTIVE
How much do you know about Social Security, Medicare and life expectancy?
Think you know your stuff when it comes to retirement? Big if true, because according to a recent report, the average U.S. adult cannot pass a short retirement fluency test.
TIAA Institute, a think tank within the financial services company TIAA, distributed a five-question quiz on retirement basics to nearly 4,000 adults in January — and on average, respondents scored just 40%.
The percentage of people who answered zero questions correctly (19%) was about the same as those who answered four or more correctly (17%).
Perhaps unsurprisingly, higher retirement confidence correlated to better test scores. Twenty-six percent of respondents who answered four or more questions correctly said they were very confident that they would have enough money to live comfortably throughout retirement. Only 7% of those who weren’t confident at all achieved the same score.
People closer to or already in their retirement years also tended to perform better than those who weren’t. Members of the “Silent Generation,” born roughly between 1928 and 1945, answered 50% of the questions correctly on average. The newly minted adults of Gen Z, on the other hand, only answered an average of 28% correctly.
Test your knowledge
Are you fluent in retirement? Below are the five exact questions (and answers) from the TIAA Institute survey.
1. Which statement about Social Security is false?
A) The amount someone receives in Social Security benefits depends upon his/her earnings during the last two years of full-time employment.
B) A worker receives Social Security benefit payments if he/she becomes disabled before retiring.
C) Social Security benefit payments will continue as long as an individual is alive, no matter how long he/she lives.
D) Don’t know.
2. Susan worries about living a long life and running out of money. What is the best way for her to address that possibility?
A) Buy an annuity.
B) Buy life insurance.
C) There is nothing she can do about this.
D) Don’t know.
3. On average, Medicare and other government programs cover how much of an individual’s health care expenses in retirement?
A) Over 90%.
B) About 2/3.
C) About 1/2.
D) Don’t know.
4. Latisha plans to start saving for retirement by setting aside $2,000 this year. Her employer offers a 401(k) plan and fully matches a worker’s contributions up to $5,000 each year. Under which scenario does Latisha have the largest amount in retirement savings at year-end?
A) She contributes $2,000 to the 401(k) plan and invests the money in a mutual fund that earns a 5% return during the year.
B) She contributes $2,000 to an IRA and invests the money in a mutual fund that earns a 5% return during the year.
C) It does not matter — she will have the same amount of year-end savings either way.
D) Don’t know.
5. On average in the U.S., how long will a 65-year-old man/woman live?
A) Man age 79, woman age 82.
B) Man age 84, woman age 87.
C) Man age 89, woman age 92.
D) Don’t know.
Answers: A, A, B, A, B.
How’d you do?
More from Money:
Americans Now Think They’ll Need a Record $1.46 Million to Retire Comfortably
Why the ‘Right’ Retirement Age Doesn’t Actually Exist
Not Everyone Is Happier After They Retire. Here’s Why
Mary Ellen (M.E.) Cagnassola joined Money as a reporter in 2022 following several years covering local communities in her home state of New Jersey and U.S. news for national brands, including Newsweek and People. Since receiving a B.A. in English and journalism and media studies from Rutgers University in 2017, M.E. has written about pretty much everything under the sun. As the versatile lead reporter for TAPinto Newark from 2019 to 2021, she won awards from the Center for Cooperative Media and the Society of Professional Journalists-New Jersey for her coverage of COVID-19, domestic violence, homelessness, eviction, police brutality, city government and more. She served on the board of the Society of Professional Journalists-New Jersey from 2021 to 2023. Her time at Money has afforded her newfound experience reporting primarily on Social Security policy, retirement, housing, lifestyle and employment. Influenced by her origins in community journalism, M.E.'s consumer finance coverage is informed by her dedication to service and equity. Some of her favorite topics that she has covered so far include the financial toll of caring for aging parents, sales taxes on diapers and period products, the booming personal loan industry and the customer service crisis at the Social Security Administration. Sometimes, M.E. makes TikTok videos for Money with her cat and Money’s in-house acting talent, Willow, from their home New York City.