Retirement isn't the sort of thing you can just jump into. Rather, it requires thoughtful planning and a modest amount of basic knowledge. Unfortunately, Americans seem to be sorely lacking in this regard. GOBankingRates recently conducted a survey on retirement and found that, shockingly, only 2% of respondents were able to pass. Here are some of the crucial points Americans need to get schooled on.

1. Social Security full retirement age

Though eligible seniors are allowed to file for Social Security as early as age 62, to collect your benefits in full, you'll need to wait until you reach full retirement age. That age is a function of your year of birth, as follows:

Year of Birth

Full Retirement Age




66 and 2 months


66 and 4 months


66 and 6 months


66 and 8 months


66 and 10 months




Most folks, however, are not aware that the full retirement age for people born after 1959 is 67. In fact, 39% of those surveyed thought it was 65. That confusion most likely stems from the fact that 65 is when Medicare coverage kicks in. And while the two programs are interrelated, it's very possible to get benefits from one without the other.

Older man putting arm around older woman on the beach


2. Social Security benefits reductions

We just learned what full retirement age is for today's workers. Waiting until full retirement age is crucial to avoid a cut in monthly benefits, but most people don't understand just how sizable a reduction they'll face by filing early. When asked what sort of reduction a person with a full retirement age of 66 would face by claiming benefits at 62, most respondents didn't realize it would amount to 25%.

But make no mistake about it: Filing four years early could leave you 25% less income each month for life. Once you start collecting benefits, the amount you get will be the amount you receive going forward unless you undo your application within 12 months and pay back every penny you've collected from Social Security thus far.

3. Roth IRA withdrawal rules

Among the many benefits of a Roth IRA is getting to take tax-free withdrawals during retirement. And while many Americans were aware of this fact, there are plenty who are still clueless about how Roth IRAs work.

Though traditional and Roth IRAs have the same annual contribution limits (currently, $5,500 for workers under 50 and $6,500 for those 50 and over), the tax treatment of those contributions is different. With a traditional IRA, you get an immediate tax break for funding an account, whereas with a Roth, you do not. However, traditional IRA distributions are taxable in retirement, while Roth IRA withdrawals are yours free and clear. And that could buy you a lot more financial flexibility in the future.

Of course, this isn't to say that Roth IRAs are a smart move for everyone. Not only that but higher earners can't contribute to Roth accounts directly. But it pays to read up on how Roth IRAs work and see if one is right for you.

4. Services not covered by Medicare

Medicare provides critical health benefits to seniors beginning at age 65, but the program also has its limitations. In fact, there's a host of common health services Medicare won't pay for, including dental care and hearing aids. In the aforementioned survey, however, only 6% of respondents knew that both services weren't covered. Incidentally, Medicare won't pay for vision services, either -- another popular need among seniors.

Since there's a lot of services Medicare won't cover, it's important to read up on the program's policies to know what to expect later on. Chances are, healthcare will come to eat up a large chunk of your income in retirement, and so planning for it could help you avoid stress down the line. Another thing -- though original Medicare won't cover dental care and hearing aids, Medicare Advantage generally will, so it pays to see if this alternative to traditional Medicare is appropriate for you.

The more you know about retirement, the greater your chances of getting to fully enjoy your golden years. So take the time to learn about Social Security, Medicare, and your various savings plan options during your working years. You'll be thankful you did later on.