Sometimes you do not have a choice but to retire with debt, especially when an illness or losing your job forces you to leave work earlier than you had planned. If you are on a tight budget during retirement, you might not be able to meet all your obligations — and perhaps you are worried how this will change your monthly Social Security payments. Keep reading to find out how unpaid debt might affect your benefits.
Could your Social Security get garnished for debt?
Yes, your benefits can get garnished for unpaid debts, but only if certain conditions are met. Basically, what would would cause Social Security to keep your benefits are close to the ones that would trigger the IRS to keep your tax refund. Essentially, if you owe money to the government or you have been ordered by a court to give money in a family law or criminal case, Social Security might garnish your payments.
Here are some scenarios where delinquent debt might result in getting smaller Social Security payments:
You are behind on your student loans. Social Security might withhold up to 15% of your benefit if you are behind on student loans. However, the first $750 per month of benefits can not be taken.
You owe back taxes. The IRS might garnish up to 15% of your benefits if your taxes are delinquent. But unlike with student loans, your first $750 is not protected.
You have been ordered to give alimony or child support. If you are behind on court-ordered alimony or child support, up to 50% of your benefits might get garnished if you support a spouse or child who is not the subject of a court order. Otherwise, as much as 60% of your benefits can get garnished. If you are over 12 weeks behind, another additional 5% might be seized.
You owe court-ordered restitution in a criminal case. Up to 25% of Social Security payments can be seized if you are behind on your restitution payments for a crime you were convicted of committing.
Remember that in all of these circumstances, your Social Security might only get lowered if you are delinquent on payments. Your benefits will not get withheld simply for owing debt. If your Social Security benefits are seized, only your current and future monthly payments will get affected. Social Security will not go after payments retroactively.
Author: Steven Sinclaire