Attention retirees – Avoid these 4 actions to keep your Social Security payments intact

Millions of retirees across the United States rely on Social Security as a crucial source of income, with the average monthly payment for retired workers standing at $1,918 as of June 2024. While Social Security provides financial security for many, there are several scenarios where you could lose access to some or even all of your benefits. Knowing these risks is vital to safeguarding your income during retirement.

Income Limits

If you continue to work while receiving Social Security benefits before reaching your full retirement age, there are income limits that, if exceeded, could reduce your benefits. For 2024, the annual exempt amount is $22,320 for individuals under full retirement age. If your earnings surpass this threshold, $1 of your benefits will be withheld for every $2 you earn over the limit.

For those who will reach full retirement age in 2024, the exempt amount increases to $59,520. However, the penalties are less severe—$1 is withheld for every $3 earned above this amount. Once you reach full retirement age, these reductions no longer apply, and your benefits will be adjusted to account for the months in which they were withheld. This means you won’t lose the money permanently; instead, it’s spread out over your remaining benefit payments.

Resource Limits

Supplemental Security Income (SSI) is a program for individuals with limited income and resources, but to qualify, you must adhere to strict resource limits. The Social Security Administration (SSA) sets the resource limit at $2,000 for an individual and $3,000 for a couple. Resources include cash, bank accounts, and other valuable assets. However, certain items, such as your home, one vehicle, and household goods, are exempt from this calculation.

If your countable resources exceed these limits at the start of any month, you will not receive SSI payments for that month, and you risk becoming ineligible for the program entirely. This underscores the importance of carefully managing your assets if you rely on SSI.

Divorce

Divorce can significantly impact your Social Security benefits, especially if you were planning to collect based on your ex-spouse’s work record. To qualify for benefits based on your ex-spouse’s record, your marriage must have lasted at least ten years. Remarrying generally disqualifies you from receiving benefits based on your ex-spouse’s record. However, if your own benefits are higher than those based on your ex-spouse’s record, you’ll receive the higher amount, so it’s essential to know your options post-divorce.

Incarceration

Legal troubles, particularly incarceration, can result in the suspension of your Social Security benefits. If you are incarcerated for more than 30 days, your Social Security and SSI benefits are typically suspended. While your benefits are paused, your dependents, such as a spouse or children, may still receive payments.

Upon your release, you can request the resumption of your Social Security benefits starting the month after your release. SSI payments are automatically resumed, though the amount may be prorated based on your release date. If you are incarcerated for 12 or more consecutive months, your SSI benefits will be terminated altogether, making it crucial to address any legal issues promptly to avoid long-term financial consequences.

Benefits

Social Security is a lifeline for millions, and understanding the circumstances that could reduce or eliminate your benefits is essential. Whether it’s managing your income to avoid exceeding limits, ensuring your assets remain within SSI thresholds, knowing the impact of divorce, or staying clear of legal issues, being informed can help protect your financial future.

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