Social Security is associated with retirees, but it also covers disabled people through Social Security Disability Insurance (SSDI) and those with limited resources through Supplemental Security Income (SSI).
While it’s difficult to lose all retirement Social Security benefits, there are some things that can cause your benefits to shrink, and certain conditions can even end SSDI payments.
What Shrinks Your Social Security Retirement Benefits?
A majority of people using Social Security benefits are retirees. If you’re getting close to retirement age, here are a few things you absolutely shouldn’t do if you want to get your full benefits.
Claiming Early
The official retirement age for Social Security is 67, but people can start claiming as early as 62. That said, waiting until 67 gets you the maximum amount of benefits while claiming early can cause you to lose up to 30% of your potential benefits, depending on how early it is you claim them.
If you do claim early, though, you have a year to withdraw your claim and start growing your benefits again until you’re 67.
Making Too Much Money
There’s no income restrictions for anyone at the maximum retirement age, but if you claim your Social Security early, you’ll want to be mindful of how much you make. The Social Security Administration (SSA) will withhold $1 for every $2 you make above that threshold.
Currently, you can earn up to $21,240 before your benefits start being withheld, unless you’re turning 67 within a year of claiming. In that case, you can earn up to $56,520, and the SSA withholds $1 for every $3 over that threshold.
Incarceration
If you’re in jail for over 30 days for a criminal conviction, the SSA will suspend your benefits until you’re released. But the good news is that spouses and dependents are still able to claim benefits even while you’re incarcerated.
Tax Withholding
Social Security is only tax-free up to a point. If you’re a single filer, earning over $25,000 means that up to 85% of your benefits are taxable. For joint filers, the limit is $32,000 for your household.
As of the 2022 tax year, 11 states count Social Security as taxable income: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah and Vermont. Some are in the process of phasing out the tax, but it’s still good to be aware.
What About SSDI and SSI?
There are a few ways you can lose SSDI benefits, one of the most common being reaching retirement age. You’ll still receive benefits – there likely won’t be a difference in your payments – but they’re done through traditional Social Security rather than Disability.
Other ways you can lose SSDI and SSI benefits include:
Going Back To Work: SSDI is specifically for people who are unable to perform “substantial gainful activity (SGA).” Currently, the SGA income limit is $1470 per month for most people. For blind individuals, the limit is $2460 per month.
Your Condition Improves: The SSA will periodically review your case and conditions after you file your claim. If your doctor thinks your condition will improve, the SSA will check back in between 6 - 18 months after claim approval. Cases of possible improvement will have a check-in 3 years after approval, and cases of no improvement will be checked after 7 years.
Incarceration: Much like with traditional Social Security, your SSDI and SSI benefits will be suspended if you’re in jail for over 30 days for a criminal conviction. If you’re confined for over 12 months, your benefits will be terminated, and you’ll need to reapply.
As we’ve seen, it is possible to lose your Social Security benefits. But now that you know what not to do, you’ll be able to ensure you get your full benefits.
If you have any other questions about Social Security, or if you’re having difficulties getting your benefit claims approved, my team is here to help. Get in touch with us today and let’s ensure you get the benefits you need.
