Is it really so hard to answer a six-question quiz on retirement planning? (Photo: Getty)

As important as it is for American workers to save enough for retirement—and to be sure that investments in their retirement plan are appropriate for their needs—most can’t pass a 6-question quiz designed to help Americans focus on six categories within retirement planning.

Related: Half of mature workers delaying or giving up on retirement

Forbes reports that most Americans come up short on the quiz, from The American College of Financial Services and the New York Life Center for Retirement Income, and are only able to correctly answer two or three questions out of the six. And that doesn’t bode well for their future retirements.

The six questions on the quiz correspond to the following six categories of retirement planning:

1. Managing portfolio withdrawal rates. Often people assume that if their investments bring in 7–8 percent per year over the course of retirement, their withdrawal rate can be the same. However, research instead says that retirees should adhere to the 4 percent rule—never withdrawing more than 4 percent per year—so that the money will last for the duration of retirement.

There can be variation, of course, based on one’s personal circumstances, but if you don’t understand it in the first place, deciding on any particular variation—particularly a withdrawal rate higher than that suggested—could result in running out of money during retirement.

2. Understanding the role of guaranteed income sources. Whether they’re purchased by a plan participant or are a part of a retirement plan, life annuities can be a vital part of that plan, since they will provide a stream of income for the life of the annuity owner (or plan participant).

They can also be useful in in making financial management easier and encouraging a retiree to stick to a budget.

3. Impact of sequence of returns risk. Most people don’t get it that if their investments in a retirement plan bring in poor returns when sold early on in retirement, the money won’t last as long as if they brought in good returns. There are ways to compensate for returns risk, but few know about or understand those, either.

4. Choosing a retirement date. If you just “pick a date” instead of considering how your age at retirement can affect the money you have to live on, you’ll likely come up short when it matters most.

For instance, deciding to retire at age 62 just because you’d like to will result in lower Social Security benefits for the duration of your retirement, while working longer will not only result in a higher benefit but reduce the number of years you’ll be dependent on a smaller income.

5. Claiming Social Security. This is another instance where ignorance can result in lower benefits for the rest of your life. Holding out till age 70 will bring a substantially higher benefit than even retiring at a normal, rather than early, retirement age, but conversely, if you are ill or come from a short-lived family, you might be better off retiring at a younger age so that you actually do get to enjoy retirement.

6. Efficient tax planning. Understanding the tax ramifications of 401(k)s, Roth IRAs and other retirement assets can enable you to withdraw retirement funds in a tax-efficient way, whether it’s by relying on Roth assets while your income is higher and Roth money is tax free or using 401(k) funds when you’re in a lower tax bracket and will owe less on 401(k) withdrawals.