Social Security serves mostly older retirees, but also the disabled through Social Security Disability Insurance (SSDI). The Supplemental Security Income (SSI) program gives extra help to the most vulnerable people, those who are disabled or blind and have limited resources. Together, the Social Security Administration (SSA) paid $1 trillion to 65 million monthly beneficiaries in 2021.
If you collect benefits or plan to in the near future, it’s important to understand how the things you do or don’t do can shrink your slice of that pie. Keep reading to learn about how you could lose some or all of your Social Security benefits.
You Forfeit up to 30% of Your Benefits by Claiming Early
The full retirement age is 67, but if you claim at 66 and 11 months, you’ll receive only 99.4% of your full payment. If you claim at 65, you’ll receive just 86.7% of your benefits. You can claim as young as 62, but if you do, you’ll receive only 70% of your full payment — for life, if you don’t withdraw your claim within a year.
You’ll Get Less if You Claim Early and Earn Too Much Money
Once you reach full retirement age, there is no income test for receiving full benefits. But if you claim early and continue to earn income, your Social Security check will shrink if you make too much money. For 2022, you can earn up to $19,560 without seeing your benefits reduced. After that, the SSA will withhold $1 for every $2 you earn above the threshold. If you’ll reach full retirement age later in the year, you can earn up to $51,960. After that, the SSA withholds $1 for every $3 earned.
If you’re incarcerated for more than 30 days as a sentence for a criminal conviction, the SSA will suspend your Social Security benefits. Although it won’t happen automatically, the SSA can resume payments the month following your release. Although the incarcerated person can’t receive benefits, spouses and dependents will continue to collect payments as long as they remain eligible.
If you earn more than $25,000 as a single filer or $32,000 as a joint filer, up to 85% of your Social Security benefits are fair game to the IRS. Twelve states also tax Social Security benefits as income.
Most people who collect SSDI will receive benefits indefinitely, but some life events can cause the SSA to terminate payments. If you receive disability benefits, you could stop receiving payments for reasons like:
- Going back to work: The most common reason for SSDI termination is the beneficiary returning to work. SSDI benefits are reserved only for people unable to engage in what the SSA describes as “substantial gainful activity” (SGA). For 2022, the monthly SGA limit is $1,350, but blind individuals can earn up to $2,260 per month without exceeding the SGA limit.
- Reaching full retirement age: You can’t collect Social Security retirement benefits and SSDI disbursements at the same time. When you reach full retirement age, the SSA will automatically stop distributing SSDI benefits and start making traditional Social Security payments. SSDI disbursements are typically identical to full retirement benefits, so recipients generally won’t see a change in payments.
- Your condition improves: Although recipients typically receive SSDI benefits for as long as a disability precludes them from working, the law requires the SSA to review their cases and conditions periodically. If doctors expect the disability to improve, the SSA will check in six to 18 months after it approves the claim. If improvement is not expected, but possible, the SSA will revisit the case roughly every three years. If they expect no improvement, the SSA will look back into the case after seven years. Ultimately, recipients are responsible for informing the SSA if their condition improves or if they go back to work.
- You’re incarcerated: Just like traditional Social Security, the SSA will suspend SSDI and SSI payments if you’re incarcerated for more than 30 days. SSI payments can begin the month after release except for recipients who are confined for more than 12 months. In those cases, benefits are terminated and the recipient has to reapply. Recent parolees don’t qualify for disability benefits, according to the SSA.
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