From CNBC —
Receiving a monthly Social Security benefit is something plenty of retirees count on. Unless they can’t.
By the Social Security Administration’s estimates, 48 percent of married couples and 69 percent of unmarried individuals get half or more of their income from Social Security. For about 1 in 5 couples, and 44 percent of single people, Social Security represents 90 percent or more of their income.
But 3 percent of retirees age 60 to 89 are what the government calls “never beneficiaries” who, true to that term, never receive Social Security. And others may encounter circumstances that reduce, suspend or eliminate their benefit.
Here’s who can’t always count on a Social Security safety net:
Non-covered workers
Roughly 11 percent of those “never beneficiaries” are employees who worked in jobs that receive a public pension and don’t pay into Social Security. Among the groups of retirees potentially affected: government workers, teachers and railroad employees. (For example, a 2014 report from advocate TeacherPensions.org estimated 1.2 million teachers — or about 40 percent of the nation’s public K-12 teachers — aren’t covered by Social Security.)
Navigating this area of Social Security gets tricky, said certified financial planner Mark LaSpisa, president of Vermillion Financial Advisors in South Barrington, Illinois.
Retirees could be eligible for some benefits if their work record includes time at other jobs that did pay into Social Security — but different provisions may kick in that reduce your own benefit by up to 50 percent, or even completely wipe out spousal or survivor benefits.
“Most of the [Social Security] offices have no clue how to handle this, because it’s not a normal process,” he said.
Felons
In many cases, a criminal record doesn’t preclude someone from receiving Social Security benefits. But there are a number of exceptions that can limit eligibility in select circumstances.
For example, Social Security rules generally prevent someone convicted of the “felonious and intentional homicide” of a worker from receiving benefits based on that deceased individual’s record. In other words, killing your spouse makes you ineligible to claim a survival or spousal Social Security benefit on his or her record.
Social Security benefits are also typically suspended for otherwise eligible individuals who are currently incarcerated, once they have been confined for 30 days. “Your benefits can be reinstated starting with the month following the month of your release,” according to the government.
Delinquent debtors
Heading into retirement with debt could be a recipe for disaster, if you can’t keep up with your obligations.
The Department of the Treasury can withhold a portion of retirees’ Social Security benefit to collect on delinquent legal obligations such as child support or alimony, as well as tax debts and other non-tax debts owed to a federal agency (think: federal student loans).
“No matter what kind of financial trouble you get in, student loans don’t really disappear,” said Victoria Fillet, a certified financial planner with Roosevelt Investment Group in New York.
How much can be taken depends on the details of your debt, but the cap for federal debts is typically around 15 percent of your monthly benefit.
The government isn’t shy about wielding that power. In fiscal year 2018, collections from consumers’ Social Security benefits to cover Department of Education debts totaled $191.5 million; for unpaid federal tax debts, more than $384.9 million, according to data from the Department of the Treasury.
Continue reading at CNBC.com
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