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Securing Your Social Security Benefits: What You Need to Know



Securing Your Social Security Benefits: What You Need to Know

Securing Your Social Security Benefits: What You Need to Know.Social Security benefits cater primarily to older retirees, as well as the disabled through Social Security Disability Insurance (SSDI). The Supplemental Security Income (SSI) program provides additional assistance to the most vulnerable individuals, including those with disabilities or blindness and limited resources.

Securing Your Social Security Benefits: What You Need to Know

In 2022, the Social Security Administration (SSA) disbursed a staggering $1 trillion to approximately 66 million beneficiaries on a monthly basis.

If you are currently receiving benefits or have intentions to do so in the near future, it’s crucial to comprehend how your actions, or lack thereof, can impact the size of your share from this sizable fund. In the following sections, you’ll discover the potential scenarios that might lead to a reduction or complete loss of your Social Security benefits.

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Claiming Early Results in Benefit Reduction

The official full retirement age stands at 67. However, opting to claim benefits at 66 years and 11 months will grant you just 99.4% of your total payment. Should you decide to claim at 65, your benefits will be further reduced to 86.7%. Even though you can claim as early as 62, this choice comes with a trade-off — you will receive only 70% of your full payment, and this reduction will persist for your lifetime if you don’t retract your claim within a year.

Early Claiming and Excessive Earnings

Once you attain full retirement age, there exists no income threshold for receiving full benefits. However, if you decide to claim early and continue to earn income, your Social Security payout will shrink if your earnings exceed a certain limit. As of 2023, you can earn up to $21,240 without experiencing a reduction in your benefits.

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Beyond this threshold, the SSA will deduct $1 from your benefits for every $2 earned above the limit. If your full retirement age is approaching later in the same year, you can earn up to $56,520 before the SSA applies a reduction of $1 for every $3 earned beyond that point.

Suspension of Payments During Incarceration

Should you find yourself incarcerated for more than 30 days due to a criminal conviction, the SSA will temporarily halt your Social Security benefits. While this suspension won’t happen automatically, your benefits will be reinstated in the month following your release. Even though the incarcerated individual won’t receive benefits, eligible spouses and dependents will continue to receive payments.

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Taxation and Loss of Benefits

Earning more than $25,000 as a single filer or $32,000 as a joint filer can lead to a situation where up to 85% of your Social Security benefits become subject to IRS taxation. Additionally, twelve states impose income tax on Social Security benefits.

Losing SSDI Benefits: 

Although most SSDI recipients receive benefits indefinitely, certain life events can lead to the termination of payments. Individuals receiving disability benefits could stop receiving payments due to:

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  1. Returning to Work: SSDI benefits are designated for individuals incapable of engaging in “substantial gainful activity” (SGA). As of 2023, the monthly SGA limit stands at $1,470, except for blind individuals who can earn up to $2,460 per month without exceeding this limit.
  2. Reaching Full Retirement Age: SSDI payments cease when recipients reach full retirement age, at which point traditional Social Security payments commence. These payments are generally similar in value to full retirement benefits.
  3. Improved Condition: Periodic reviews of recipients’ cases and conditions are mandatory. If medical professionals anticipate improvement in the disability, the SSA conducts reviews within specified timeframes, ranging from six months to seven years.
  4. Incarceration: Similar to regular Social Security, SSDI and SSI payments are suspended for individuals incarcerated for over 30 days. SSI payments can resume the month following release, except for those imprisoned for more than 12 months, who must reapply.
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By understanding these potential scenarios, you can make informed decisions to safeguard your Social Security benefits and financial stability.

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