Social Security provides financial support to retirees and people with disabilities through Social Security Disability Insurance (SSDI).
The Supplemental Security Income (SSI) program also helps vulnerable individuals who are disabled or blind and have limited resources.
In 2023, the Social Security Administration (SSA) paid out $1.4 trillion to 71.6 million beneficiaries each month.
If you currently collect Social Security or plan to start soon, it’s important to know how your actions could reduce or eliminate your benefits.
Here’s how you could lose part or all of your Social Security payments:
Claiming Early Could Cut Your Benefits by Up to 30%
The full retirement age is 67. If you claim benefits at 66 and 11 months, you’ll receive 99.4% of your full payment.
If you claim at 65, you’ll receive only 86.7% of your benefits. If you start as early as 62, your monthly payment will drop to just 70% of the full amount — and this reduction will last for life unless you withdraw your claim within a year.
Earning Too Much Money Could Reduce Early Benefits
Once you reach full retirement age, you can earn as much as you want without affecting your benefits.
However, if you claim benefits early and continue working, your Social Security payments will be reduced if your income exceeds a certain limit.
Going to Jail or Prison Can Suspend Payments
If you’re incarcerated for more than 30 days due to a criminal conviction, the SSA will suspend your Social Security payments.
After you’re released, your benefits can resume starting the following month.
While the incarcerated person won’t receive payments, eligible spouses and dependents will continue to receive benefits.
Taxes Can Take a Portion of Your Benefits
If your income exceeds $25,000 as a single filer or $32,000 as a joint filer, up to 85% of your Social Security benefits could be taxed.
Additionally, 12 states also tax Social Security benefits as income.
How You Could Lose SSDI Benefits?
If you receive SSDI, you could stop receiving payments under certain conditions, such as:
- Returning to work – SSDI is meant for people who can’t engage in “substantial gainful activity” (SGA). In 2023, the SGA limit was $1,470 per month ($2,460 for blind individuals). If your earnings exceed this limit, you could lose your SSDI benefits.
- Reaching full retirement age – Once you reach full retirement age, SSDI payments will stop and switch to standard Social Security payments. Since SSDI amounts are typically the same as full retirement benefits, your payment amount usually won’t change.
- Health improvement – If your medical condition improves, the SSA may stop your SSDI payments. The SSA reviews disability cases regularly — within six to 18 months if improvement is expected, every three years if it’s possible, and every seven years if no improvement is expected. It’s your responsibility to inform the SSA if your condition improves or you start working.
- Incarceration – Like regular Social Security, SSDI and SSI payments will stop if you’re incarcerated for more than 30 days. SSI benefits can resume the month after your release unless you were confined for more than 12 months — in that case, you’ll need to reapply. People on parole are not eligible for disability benefits.
Understanding how Social Security works and how different factors affect your benefits can help you avoid losing the money you rely on.
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