First, what does it mean to have my earnings garnished? Simply put, garnishing earnings is the process of withholding our money to pay off our debts. Wages and earnings can only be garnished if a judge says so; for example, if you lose a court case with a creditor or someone you owe money too the judge will withhold earnings till the debt is paid. Different types of assets and income can be garnished, but are our retirement income and Social Security benefits also put at risk? Once again, the experts at Investopedia.com shed some insight on the question, can my benefits be garnished?
Social Security benefits can be garnished, but only by specific creditors. Commercial creditors are unable to garnish our benefits, according to the Social Security Administration. Other retirement accounts like IRAs or 401ks are protected against garnishment, if they are not distributed; specifically for IRAs, the first million dollars are protected against bankruptcy and cannot be seized to cover existing debts. Bear in mind this only applies to benefits and retirement savings, any other asset could be up for grabs.
Can My Benefits Be Garnished?
So, if commercial creditors can’t, who can garnish my benefits? The quick answer — the federal government. The federal government can garnish any retirement income, including Social Security benefits. For example, if you owe federal taxes, default on a federal student loan, or owe child support or alimony, you may have your benefits garnished to pay off any debts. If you owe taxes or a loan payment, your benefits may be garnished by 15 percent. If you owe child support, up to 65 percent of your benefits can be garnished.
Having any type or earnings garnished is a big deal and can lead to severe financial burdens. The best situation, if you find yourself in financial danger, is to seek outside help. Get creative with your benefits, and strict with all finances, savings, and expenses. The Council for Retirement Security’s mission is to safeguard the Social Security Trust, ensuring everyone has a shot at retirement. With mindful accounting, and helpful insight, you can enjoy your retirement and keep your earnings for yourself.