For many Americans, Social Security is not just a benefit—it is a lifeline. The average monthly payment is just under $2,000, which often makes up the largest part of retirement income. That is why protecting those benefits is so important. What many people do not realize is that there are certain situations where you could lose part of your benefits or see your checks reduced. The good news is, with a little planning, you can avoid surprises and make the most of your retirement income.
Working before full retirement age
If you decide to claim Social Security before reaching your full retirement age, but you also keep working, you need to be careful. Your earnings can reduce your benefits temporarily if they go over the Social Security Administration’s annual limit.
For 2025, here is what the limits look like:
- If you are under full retirement age, you can earn up to $22,560 before your benefits are affected.
- If you go over, your benefits are reduced by $1 for every $2 you earn above the limit.
- In the year you reach full retirement age, the threshold jumps to $59,520, and the reduction changes to $1 for every $3 above the limit until the month you reach full retirement age.
- Once you hit full retirement age, you can work and earn as much as you want without losing benefits.
It is worth noting that these reductions are not permanent. Social Security recalculates your benefits later, giving you credit for the months when checks were reduced. But planning ahead can help you avoid a shock when those first smaller checks come in.
Recommended:
Having your benefits garnished or taxed
Even if your Social Security payments are meant for you, nevertheless, a number of debts or taxes may be chipping away at them, such as:
- Garnishment for federal debts: These include debts such as federal taxes, certain student loans, or unpaid child support, which may be garnished from your benefits by the government.
- Taxes on benefits: Depending on your overall income, up to 85% of your Social Security benefits may be taxable. Don’t take this to mean you lose the entire amount, though: it is just a reduction in what you are actually allowed to keep.
Therefore, it is wise to look at your full income picture prior to retirement. Altering withdrawals from savings or spreading out income might be a way to lessen the tax hit on your Social Security.
Changes in eligibility or personal circumstances
Some people collect Social Security based on spousal or survivor benefits. These benefits can change depending on your personal situation.
- If you are a divorced spouse and remarry before age 60, your benefits could stop.
- Children receiving benefits may lose them once they age out.
- The Social Security Administration may also ask you for updated paperwork, like proof of age or citizenship. Failing to provide this could temporarily halt your payments.
- Living abroad in certain countries can also affect your eligibility, depending on your citizenship status.
Keeping your information up to date and understanding the rules around spousal and survivor benefits can help you avoid losing money you depend on.\
Recommended:
How to protect and maximise your income
If you feel that your Social Security is not going to be enough for you, the best decision would be to devise a serious retirement plan that does not depend on those checks alone. Consider:
- Income annuities to provide a steady income for life.
- Reverse mortgages, if you own a home and want to tap into its value.
- Diversified savings and investments, to spread the risk of relying too heavily on one source of income.
Taking proactive steps today could indeed become the difference in the realization of your dream of an assured and comfortable retirement.
