Millions of Americans rely on Social Security for some or all of their retirement income, and millions more are paying into the system in the expectation that it will be there for them when they retire.  What changes should be made to the current Social Security system, if any, to keep it solvent and ensure that retirees do not live in poverty?

The 2016 presidential candidates have a wide range of proposals, from raising the full retirement age (most of the Republican candidates) to increasing the minimum benefit (Bernie Sanders and Martin O’Malley).  As a way to increase revenue, all three Democratic candidates favor lifting the payroll tax cap; currently, no Social Security tax is paid on income over $118,500 (in 2016).

The Center for Retirement Research of Boston College has compiled a chart comparing the candidates on their proposed Social Security changes.  Four GOP candidates, including Donald Trump and Carly Fiorina, have not proposed changes to the program.

To view the chart, click here.

If you don’t pay your debts, creditors can get a court order to garnish your wages, but what if your income comes from Social Security? The answer is that it depends on the kind of debt.

For most types of debt, including credit cards, medical bills, and personal loans, Social Security cannot be garnished to pay the debt. If you owe money to a creditor, the creditor can go to court and get an order to take money from your bank account. If your Social Security check is directly deposited in the bank, the bank is required to protect Social Security benefits from garnishment. When a creditor tries to freeze a debtor’s bank account, the bank is required to look at the debtor’s previous two months of transactions to determine if the debtor received any Social Security benefits by direct deposit. For example, if you receive $1,500 a month in Social Security, the bank is required to allow you to use up to $3,000 in your account.

If you receive a Social Security check and deposit it in the bank yourself, the bank can freeze the entire amount in the account. You would be required to go to court and prove the money in the account came from Social Security.

There are certain debts, however, that Social Security can be garnished to pay for. Those debts include federal taxes, federal student loans, child support and alimony, victim restitution, and other federal debts. If you owe federal taxes, 15 percent of your Social Security check can be used to pay your debt, no matter how much money is left.

For student loans and other non-tax debts, the government can take 15 percent of your Social Security check as long as the remaining balance doesn’t drop below $750. There is no statute of limitations on student loan debt, so it doesn’t matter how long ago the debt occurred.  (In fact, student loan debt may be the next crisis facing elderly Americans. In 2015, bills were introduced in the House and Senate, HR 3967 and S 2387, to stop the government from garnishing the wages of elderly and disabled Social Security recipients.)

The rules for child support and alimony vary depending on the law in your state. The maximum amount that can be garnished is 50 percent of your Social Security benefit if you support another child, 60 percent if you don’t support another child, or 65 percent if the support is more than 12 weeks in arrears.

These rules do not apply to Supplemental Security Income (SSI). SSI is protected from garnishment even if the creditor can garnish regular Social Security. Social Security Disability Insurance can be garnished in the same way that Social Security is garnished.

If you feel your Social Security is being improperly garnished, contact your lawyer. 

For more information about Social Security, go here: http://www.elderlawanswers.com/social-security.

The federal budget agreement that President Obama signed into law November 2, 2015, spells the end to two Social Security strategies that some spouses have used to maximize benefits. The strategies were worth tens of thousands of dollars over a lifetime for some couples and their impending demise may require beneficiaries to take action before the changes take effect or reconsider their retirement plans.

According to Social Security’s rules, the spouse of a worker cannot claim a spousal benefit unless the worker has applied for Social Security benefits. Currently, a worker is able to file for Social Security benefits at full retirement age, which is now 66, and then suspend benefits. This strategy — called “File and Suspend”  — allows the worker’s spouse to begin receiving spousal benefits while the worker postpones receiving benefits. The longer the worker delays retirement, the more delayed retirement credits he or she will accumulate (up to age 70), resulting in a larger Social Security check. 

Under the new law, a spouse cannot begin receiving benefits until the worker is actually receiving benefits, too. Workers can still file and suspend, but spouses (or other dependents, including minor and disabled children) cannot receive benefits during the suspension. The law will take effect on April 30, 2016, but it does not affect workers who have already filed and suspended benefits. Workers who are at least 66 or will turn 66 before the effective date of the law may still file and suspend in order to trigger benefits for their spouse.

The law also changes another rule that allows a spouse who takes benefits at full retirement age to choose whether to take spousal benefits or benefits on his or her own record. This strategy – commonly known as “Claim Now, Claim More Later”  — allows a higher-earning spouse to claim a spousal benefit at full retirement age. Then at 70, the higher-earning spouse would claim the maximum amount of his or her retirement benefit and stop receiving the spousal benefit.

If you are 62 or older by the end of 2015, you will still be able to choose which benefit you want at your full retirement age. Under the new law, when workers who are not 62 by the end of 2015 apply for spousal benefits, Social Security will assume it is also an application for benefits on the worker’s record. The worker is eligible for the higher benefit, but he or she can’t choose to take just the spousal benefits and allow his or her own benefits to keep increasing until age 70. This new rule does not apply to survivor’s benefits. A surviving spouse will still be able to choose to take survivor’s benefits first and then switch to retirement benefits later if the retirement benefit is larger.  

Contact your elder law attorney or financial advisor to determine if you should take any action before the new rules become law. 

For more information on who is affected by the rules, click here.

For questions and answers on the changes, click here.