4 Ways You Could Lose Your Social Security Benefits

in this video i discussed four ways you could accidentally lose your social security benefits coming up next on holy shmet holy schmidt we work hard for 30 40 some of us even 50 years to plan for the day where we step off the assembly line walk out of the office etc and go into retirement but unknowingly there are certain situations which will cause what we expected to get from social security to be reduced maybe even eliminated if you're not careful this video will discuss what those four ways are and how you can protect yourself against those ways now let's get into it but before we do please make sure you click subscribe and notifications so that you get alerted the next time i post a video i post about twice a week all right point number one is blowing through your earnings limit a lot of people think that once they reach the age to draw social security they don't need to think about whether or not they continue to work they've paid the money into the system they've done the 30 35 40 years as i mentioned before and now it's their turn this is understandable because the fine print isn't posted on your check every two weeks or every month when they take out your social security tax and so therefore you just look at what you've been paying in and assume you're going to get some or all of that back the earnings limit is one of the top negative social security surprises and so this is why it's the first of the points i'm going to talk about let's talk about what the earnings limit is and what it means earnings by definition means something that you get from your job or if you're self-employed from your business if you're still working when you draw social security or if you're still self-employed when you draw social security the social security administration will calculate what's called an earnings limit adjustment they use earnings limits based on one of two calculations if you have not reached your full retirement age or if you are in your full retirement age year and the number that they give you and the reduction that they reduce your payment by is different depending on which of those two buckets you fall in so to speak in 2022 the non-full retirement age limit is nineteen thousand five hundred sixty dollars for every two dollars you earn over that amount you have to give one dollar back to the social security administration theoretically you get it later but it doesn't change the fact that your cash flow is less today than you were expecting let me walk you through an example to show you what happens in the non-full retirement age year if you earn 56 680 that's the average income of someone in this country that equates to four thousand seven hundred and twenty three dollars per month the twenty twenty two earnings limit is nineteen thousand five hundred sixty dollars this equates to sixteen hundred thirty dollars per month and the average social security payment for 2022 is forecasted to be 1657 dollars per month those are three very important numbers and if you understand what these three numbers are the rest of this is quite easy to calculate let's assume you continue to work full time you have four thousand seven hundred twenty three dollars of income coming in you have an earnings limit of sixteen hundred thirty dollars per month so the net overage is three thousand ninety three dollars that's three thousand ninety three dollars more than the social security administration allows you to earn without a back or a reduction so if you earn 3093 more than the earnings limit and you are required to give back one dollar for every two dollars over that amount that means that you simply divide 3093 by two that's fifteen forty seven per month that you have to give back to the social security administration unfortunately if you receive the average payment of sixteen fifty seven you have a net inflow of a hundred and ten dollars per month after they give back to the ssa if this is the year that you reach full retirement age for conversation sake let's say that's age 67 it will be somewhere between 66 and 67 for everyone watching this video then the earnings limit is fifty one thousand nine hundred sixty dollars and in that scenario you have to give back three dollars for every dollar over that amount that you earn once you reach full retirement age you don't have to give back anything so you can both work full-time and draw full social security and you'll be just fine point number two is claiming social security too early there are three numbers that you need to know 70 100 and 124 and those three numbers correspond to the amount of social security payment you get at different ages at age 62 you get 70 percent of the payment you're due at full retirement age at full retirement age 66 or 67 or somewhere in between depending on your particular situation you get 100 of what you do at full retirement age of course and if you wait until age 70 you get 124 percent of what you would have received had you taken social security at full retirement age the fact is almost half of the social security recipients take social security at age 62. now why do they do that if the difference between a payment at 62 and a payment at 70 is almost double well there are a lot of reasons some of them make great sense like health reasons or you just want to travel and you have plenty of money but other reasons are a little bit harder to understand the one that's most common is i've waited i'm due i'm taking it this usually happens in the same conversation as someone who said i've worked x number of years my entire adult life and i'm not working another day at my job and then the next reason is the no reason reason as i call it which is seems like a good time i don't really have a reason why so i'm just going to take it now that person doesn't understand 70 100 124 and the meaning behind those numbers so just remember social security has a progressive payment structure the longer you wait the larger your payment but the less payments you get obviously by the way for those of you who still aren't sure about which way to go i have videos which will help you with that i'll put a link at the end to one of them and that will help you figure out whether 62 70 or somewhere in between is the right age for you point number three is a legal offset debt that you owe someone else we've all heard somewhere that social security payments are sacrosanct they are untouchable by creditors for the most part this is true doctors and hospitals can't go after your social security payment nor can your credit card company if they could there would be a lot more retirees living on the street because sometimes the social security payment is the only thing that's standing between them and something really bad but retirees are not bulletproof in this regard just because you're receiving a social security payment doesn't mean that your payment can't get garnished under certain circumstances it's rare but it can happen classic example is government that the irs small business administration student loan debt all three of those are very good examples of where the government can go in and garnish your social security payment then there's non-government that which can also pierce the protections that you would normally have child support and alimony are two that come to mind immediately and the last one is victim restitution if a court deems that you've committed a crime and there's restitution due to the victims well your social security payment can be used to pay those victims outside of those scenarios or situations similar to those scenarios you're not going to have to give up part of your social security payment to someone else the last one is one that catches a lot of people off guard and that's taxes on social security that's because there are a lot of different rules for social security and people often confuse taxes on social security and the rules around taxes on social security with the rules around income limits or earnings limits that we talked about in point number one in point number one i noted that there was a threshold nineteen thousand five hundred sixty dollars during a non-full retirement age year or fifty one thousand nine hundred sixty dollars in your full retirement age here if you earn above these amounts from your job you'll have to give part of the excess back to the ssa at least for now but in those situations the ssa doesn't touch your social security payment if you're drawing from your 401k or your ira or your pension because each one of those is irresponsible at least deemed to be responsible by the ssa method to plan for your retirement they don't want to dissuade people from protecting themselves as they go into retirement there's a certain logic to that of course if you've spent the last 35 or 40 years scrimping saving working really hard to get money into a retirement vehicle only to have the social security payment taken away because you did that well that doesn't seem very fair and you would have a lot of people that didn't save for retirement if that was in fact the case on the flip side you sort of remember that on your paycheck your fica contribution was made with after-tax dollars at least your portion was you didn't get a tax break when you paid into fica much like you don't get a tax break when you pay into a roth ira or 401k to many people this sort of signals that you're going to receive your social security payment tax free because you paid in with after-tax dollars now the day comes when you're officially in retirement you walk out of the building that you've worked at for the last 30 or 40 years and you head off into your great adventure the one that you've been waiting for since you started working way back when you're safe because you abided by the rules of social security you don't have any clawback coming because you aren't receiving a paycheck or in the case of owning your own business you've shuttered the business and you're no longer in the business but april 15th comes around and your accountant or your tax software depending on which way you're going tells you that you owe money on your 401k contributions that's okay because you paid into your 401k with pre-tax dollars you got the tax benefit but your tax software also says that you owe taxes on a portion of your social security so what happened well in a nutshell the government uses a different set of rules for taxes on social security than it does earnings while you're drawing social security the government doesn't use earned income threshold for taxes it uses something called combined income combined income is basically your adjusted gross income so this is income from your 401k your ira earnings if you had earnings from a job etc plus municipal bond interest plus one half of your social security payment if that combination equals 25 000 or more then the excess is taxable that's if you're single if you're married the threshold is 32 000 of combined income or more again any amount above that is taxable if you like this video and you want to see more of me please make sure you click subscribe and turn on notifications so that you get alerted the next time i post a video there's a lot going on with social security right now a lot of changes are underway and i work very hard to get what's out there in here for you also as i mentioned at the beginning of this video check out this video here which will help you decide whether you should take social security early or take it late this is jeff schmidt thanks for watching

Channel: Holy Schmidt!

Views: 1,098,388

Keywords: garnish social security, taxes on social security, taxes on social security, taxes on social security benefits, taxes on social security at full retirement age, social security income limits, when to file for social security benefits, when to file for social security

Id: XrxBmwIv8do

Length: 12min 48sec (768 seconds)

Published: Sun Dec 19 2021