For millions of retirees and other older Americans who are still working, Social Security is a lifeline. Making sure you’re eligible for every dollar coming your way isn’t something you want to skip — because believe it or not, Social Security isn’t guaranteed.
In fact, there are more than a half-dozen ways for you to lose out on advantages that you paid for with your tax money.
You Failed the Earnings Test for Social Security
To qualify for benefits, early claimants who are still working must pass the Social Security earnings test. Once you reach full retirement age, there is no such test.
The Social Security Administration (SSA) temporarily withheld $1 in benefits for every $2 earned over $18,960 in 2021, however, individuals entering the year of full retirement face a more forgiving monthly test.
You Didn’t Have Enough Credits
To qualify for Social Security benefits, you must first work for a specific amount of time, pay into the system, and accumulate enough “credits” to qualify. In 2021, you received one credit for every $1,470 in earned income, up to four credits per year or one credit per quarter.
To be eligible for Social Security payments, most people must have 40 credits, which implies they must work for ten years.
You owe a debt that is subject to garnishment.
Private lenders will have a hard time snatching your Social Security income, but your benefits can be garnished to pay off certain types of obligations. Alimony, child support, and restitution are among them, but the states decide what constitutes a valid garnishment order.
If your payments have been garnished for any of these reasons, you should contact the relevant state agency rather than the Social Security Administration.
You would be correct if you guessed that tax debt is one of the other exceptions. The Treasury Department can deduct up to 15% of your Social Security income each month until your tax liability is satisfied.
Your benefits may also be garnished by the Treasury Department for nontax debt, such as any federal student loans you may have defaulted on.
The Civil Service Retirement System protects you
Some government employees hired before 1984 have been contributing to the Civil Service Retirement System instead of Social Security (CSRS).
The Civil Service Retirement System (CSRS) was established as part of the Civil Service Retirement Act of 1920 and was superseded by the Federal Employees Retirement System (FERS) in 1987. CSRS recipients are not eligible for Social Security benefits unless they have another worker or a spouse who is.
The Railroad Retirement Act protects you
Some railroad personnel are insured by a separate retirement scheme from Social Security and are therefore ineligible for benefits. People who contribute more of their income to the Railroad Retirement Act earn greater compensation when they retire, especially “career employees” with at least 30 years on the job.
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You are ineligible for the benefits of a divorced spouse
Some persons may be qualified for benefits based on their former spouse’s records, but they must first complete specific requirements.
You must have been married for at least ten years and have not remarried, though you may still be eligible if your former spouse does. There are other standards, so if you want to file for benefits based on a former spouse’s record, make sure you meet them first.
In retirement, you moved a long way
If you reside abroad in retirement, you can usually collect Social Security in another nation, albeit you must follow tight and particular restrictions from both the SSA and your host country.
The SSA, on the other hand, is prohibited from transferring funds to a small number of nations, but don’t panic. None of them are precisely retirement havens for Americans.
Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, and Uzbekistan are among those countries. There are minor exceptions for some qualified retirees in such nations, but you will never be able to collect Social Security in Cuba or North Korea.