Defend Your Retirement Income: Your Social Security Benefits Explained

Social Security is a vital source of income for millions of Americans after they retire. The Social Security Administration updates the estimated benefits each year so that the recipients have a clear idea of the amount they will receive. In most cases, Social Security payments are considered federal payments and are protected from creditors, according to Bankrate on September 22, 2022. However, there are some circumstances where a poor credit score or unpaid debts can affect the amount received or even lead to garnishment.

The good news is that creditors can’t take Social Security payments except in specific cases like owing back taxes or court-ordered alimony or child support, where the government can garnish up to 15% or 50–65% of payments, respectively, based on a report by Go Banking Rates on January 27, 2023.

Contrary to popular belief, a recipient’s credit score does not affect Social Security payments, which are based on lifetime earnings and filing age. Low credit scores and low-paying jobs can result in a lower benefit due to correlation.

The bottom line is that while a bad credit score won’t directly impact Social Security payments, bad financial behaviors such as falling behind on taxes, student loans, or consumer credit can lead to garnishment. There is also a correlation between lower credit scores and lower income, which can result in a lower Social Security benefit. If the recipient is struggling to make ends meet, it’s advisable to discuss their options with a financial counselor or creditors.