The Social Security Administration (SSA) has announced the circumstances under which retirement benefits could be suspended or garnished. Those who fall into a certain group of debtors, especially with outstanding federal obligations, will have their monthly payments affected.
Specifically, those with overdue tax debts could see a reduction of up to 15% in their benefit. This adjustment will also be accompanied by the changes planned for 2025, when the SSA will introduce a 2.5% increase in all benefits and changes in the retirement age for those born in 1959 and 1960.
Federal tax debts that allow up to 15% of monthly payments to be garnished
According to official information, the US Treasury Department will be able to withhold a portion of the benefits of those with overdue federal taxes. Under Section 6334(c) of the Internal Revenue Code, up to 15% of the retirement benefit can be garnished to pay off the debt.
In the case of non-tax debts, the Treasury Department also has the power to withhold Social Security payments under the Debt Collection Improvement Act of 1996. The SSA clarifies that, in these cases, there is no defined limit, so the suspension can be total. The Administration also emphasizes that benefits can be garnished to meet child support, alimony or restitution obligations.
2.5% increase in Social Security retirement benefits and its impact in 2025
The SSA confirmed a 2.5% increase in Social Security and Supplemental Security Income (SSI) benefits. This cost-of-living adjustment (COLA) will take effect in January 2025, although SSI recipients will have already seen part of the increase reflected in their January advance payment.
In the official SSA notice, each person will be able to consult the final amount they will receive, as well as any deductions associated with outstanding debts. In addition, the maximum Social Security taxable earnings will rise to $176,100, while the income limit for those who have not yet reached full retirement age will rise to $23,400 per year. Those who reach full retirement age in 2025 will have a limit of $62,160.
Changes in the retirement age for those born in 1959 or 1960 according to the SSA
From 2025, people born in 1959 or earlier will be able to apply for retirement without penalties, receiving 100% of the monthly payments. For those born in 1960, the full retirement age is 67, which means that they will have to wait until then to receive the full benefit.
Another new feature is that workers who wish to remain active beyond the full retirement age will not have their benefits reduced for continuing to generate income. Similarly, the SSA allows retirement application procedures to be started up to four months before reaching the required age, facilitating planning.
How the permanent reduction in payments for early retirement works
For those who choose to retire before full retirement age, the SSA applies a definitive reduction in the pension. For the first 36 months of early retirement, the benefit is cut by around 0.55% for each month of early retirement. After that period, the discount drops to 0.42% per month.
For example, if someone born in 1960 decides to start collecting at the age of 62, they will assume a total decrease of 30%. This adjustment will continue throughout the beneficiary’s life. Proper planning of the retirement date is essential to avoid significant losses in the final amount.
| Concept | Limit / Reduction |
|---|---|
| Maximum taxable Social Security earnings | $176,100 |
| Earnings limit for workers below full retirement age | $23,400 (reduction of $1 for every $2 earned above this threshold) |
| Earnings limit for those reaching full retirement age in 2025 | $62,160 (reduction of $1 for every $3 earned above this threshold) |
| Early retirement reduction (first 36 months) | 0.55% per month |
| Early retirement reduction (subsequent months) | 0.42% per month |
These figures help beneficiaries calculate more accurately how much they could receive when they retire, as well as to anticipate possible deductions for outstanding debts. Once you have finish with this news about Social Security, don’t forget that you can see other articles related to the economy, by accessing our specialized section.
