A contingent of retirees in the United States will soon lose their Social Security benefits, as per a recent statement issued by the Social Security Administration (SSA). The SSA announced that a portion of retirees will not be receiving their Social Security benefits due to particular eligibility concerns. Numerous Americans saved their earnings throughout their employment to secure a reliable income post-retirement.
Amid rising inflation and persistently high interest rates, an increasing number of retirees are relying on Social Security more than ever. The SSA anticipates that roughly 64 million individuals across the country will benefit from Social Security in 2024. However, some seniors may not be as privileged.
The SSA indicates that around 3.3% of older Americans, referred to as “never recipients,” will never receive benefits regardless of their eligibility or age. According to the SSA, 88% of individuals categorized as “never beneficiaries” are either infrequent workers or immigrants who arrived late. Late-arriving immigrants are those who moved to the United States after the age of 50 and have not earned sufficient income to qualify for benefits.
Their shorter work histories often prevent them from making the minimum Social Security contributions necessary for qualification. Infrequent workers represent another demographic struggling to qualify. These individuals may lack sufficient contributions to the program because they haven’t maintained consistent employment over the years.
Challenges to Social Security eligibility
Certain Americans employed in sectors not covered by Social Security, such as government roles, might depend on pensions or alternative retirement funds, despite having adequate income levels. The population of “never beneficiaries” also increases because some who are eligible do not survive long enough to claim their benefits.
Individuals categorized as “never beneficiaries” are more vulnerable to financial hardship in their retirement years. Statistics reveal that 54.3% of “never beneficiaries” live beneath the poverty threshold, in stark contrast to merely 5.8% of beneficiaries. This significant gap highlights the essential role that these payments play in preventing seniors from sliding into poverty.
Moreover, Americans might inadvertently forfeit their entitled benefits if they make errors while applying for Social Security. The complexity of the Social Security system, which is governed by numerous rules concerning eligibility and benefit calculations, can be daunting. A single mistake in the application process could lead to severe consequences, resulting in individuals missing out on substantial benefits throughout their lifetimes.
A prevalent yet debatable strategy for enhancing benefits is to delay the receipt of Social Security. Benefits increase by 8% for each year they are postponed, making this option attractive for those looking to increase their retirement income. Nonetheless, this approach could be counterproductive if an individual passes away before accessing the deferred benefits or if there are significant modifications to the Social Security system during the waiting period.
Additionally, larger benefits could lead to elevated tax obligations, potentially offsetting the benefits of deferring.
