Receiving Social Security benefits can be a vital source of income, especially for retirees, individuals with disabilities, and low-income earners. However, many recipients may not be aware that these benefits are not always guaranteed. Each year, about 70,000 people lose their Social Security benefits for various reasons, according to a June 8 NPR report. Knowing the circumstances under which you could lose your benefits can help you navigate your finances more effectively.
Earning More Income
One of the most common ways to lose Social Security benefits is by earning more income, though the impact varies depending on the type of benefit you receive.
SSI
SSI (Supplemental Security Income) benefits are designed for individuals with limited income and resources. The Social Security Administration (SSA) sets a strict income limit for SSI eligibility—$1,971 per month as of 2024. If you earn more than this amount, you will no longer qualify for SSI benefits. Additionally, your SSI payment is reduced by $1 for every $2 you earn above a certain threshold. The maximum monthly SSI payment in 2024 is $943 for an individual and $1,415 for a couple. Therefore, gaining employment or receiving another source of income could disqualify you from receiving SSI or significantly reduce the amount you receive.
SSDI
For SSDI (Social Security Disability Insurance) recipients, the SSA provides a nine-month trial work period, allowing you to test your ability to work without losing your benefits. During this period, you can earn an unlimited amount without affecting your SSDI payments. However, after this trial period, if you earn $1,550 or more per month, your income will be considered “substantial gainful activity” (SGA), and your benefits may be suspended. The SSA offers a 36-month reentitlement period following the trial work period, during which your benefits can be reinstated if your earnings drop below the SGA threshold. But once this reentitlement period ends, your SSDI benefits will be terminated if your earnings continue to exceed the SGA level.
Incarceration
Incarceration is another situation that can lead to the suspension or termination of Social Security benefits.
SSDI
If you are incarcerated for more than 30 days, your Social Security or SSDI benefits will be suspended. Upon your release, your benefits can be reinstated beginning the month after you are released. For instance, if you are released in May, your benefits could resume in June. Importantly, this only applies to your own benefits—your spouse or children will continue receiving their benefits as long as they remain eligible.
SSI
SSI benefits are also suspended during incarceration, but the rules are slightly different. Payments may resume the month you are released, with the first payment prorated based on your release date. If your incarceration exceeds 12 consecutive months, your SSI benefits will be terminated, and you will need to file a new application to reinstate them after your release.
Divorce
Divorce can impact your Social Security benefits, particularly if you were receiving benefits based on your ex-spouse’s earnings record.
- Married for Less Than 10 Years: If your marriage lasted less than 10 years, you are not eligible to receive benefits based on your ex-spouse’s record after divorce.
- Remarriage: If you remarry, you will generally lose the benefits based on your ex-spouse’s record unless your new marriage ends in annulment, divorce, or the death of your new spouse.
- Higher Own Record Benefits: If you qualify for benefits on your own earnings record and they are higher than the benefits based on your ex-spouse’s record, you will receive the higher amount and lose the spousal benefits.
While Social Security benefits provide crucial financial support for millions of Americans, they are not always permanent. Changes in income, incarceration, and life events like divorce can all impact your eligibility or the amount of benefits you receive. Knowing these factors can help you better manage your finances and avoid unexpected disruptions to your income.
FAQs
What happens if I start earning more money while receiving Social Security?
Your benefits could be reduced or terminated depending on the type of benefit and the amount you earn.
Can I lose my Social Security benefits if I go to prison?
Yes, Social Security and SSI benefits are typically suspended during incarceration.
How does divorce affect Social Security benefits?
You may lose benefits based on your ex-spouse’s record if you were married for less than 10 years or if you remarry.
What is the trial work period for SSDI recipients?
SSDI recipients can work for nine months without losing benefits, regardless of income.
Are Social Security benefits automatically reinstated after incarceration?
For Social Security/SSDI, benefits can resume the month after release; for SSI, you may need to reapply if incarcerated for over 12 months.