Cost-of-Living Adjustments, popularly known as COLA, is designed to increase Social Security payments each year to ensure that they remain relevant even with inflation. Still, not all retirees will be able to collect these benefits, even with the changes in payments. It is important to know the reason why some retirees might be left out of these benefits so that you do not find yourself in that situation.
Who are the “Never Beneficiaries”?
The term “never beneficiaries” refers to a number of retirees who, despite having reached their full retirement age, are considered ineligible for Social Security payments. According to the Social Security Administration (SSA), only 3.3% of retirees fall into this group. These group includes individuals who:
- Did not accumulate enough work credits: To be considered qualified for Social Security, you need to at least have up to 40 work credits and this is usually earned over a minimum of 10 years. Therefore , of you have not worked for a long time in jobs that are covered by social security then you will not be qualified.
- Late-arriving immigrants: Immigrants who come to the U.S. later in life may struggle to get the needed work credits. This is especially so, if you arrived in the U.S before the age of 50. At this age, you may not be able to earn enough to work long enough to qualify for retirement benefits.
- Workers in non-covered jobs: Some jobs, especially some government positions, do not pay into the Social Security system. Workers in this kind of job rely on pensions instead of social security benefits.
Will filing errors affect your eligibility?
A very familiar reason for the loss of benefits under Social Security is often attributed to mistakes in filing the claim. The claim procedure can be long and complicated such that minor mistakes may result in delays of payment or complete disqualification.
Filing problems include the following:
- Inadequate documentation: Filing incomplete or inaccurate documents will cause the processes to take longer than necessary.
- Late application: Late application can result in missing out on your benefits for months or even years.
Experts say that in America, above all else, most social security beneficiaries lose certain benefits simply because of incorrect completion of their application process, a situation that could be avoided.
The impact of Social Security on poverty
The significance of social security benefits cannot be overemphasized since it Keeps the retirees from falling below the poverty line. On the other hand, those who do not qualify for any benefits are at a higher risk of economic hardship. In fact, while only 5.8% of people who receive Social Security live below the poverty line, an astonishing 54.3% of those who are ineligible for benefits live in poverty. This disparity further highlights the importance of social security as far as economic well being in retirees is concerned.
What are the alternatives for those without Social Security?
You may be considered as one of the “never beneficiaries,” however, there are still some alternatives in assisting your retirement:
- Pensions: Some workers in non-covered employment should be able to access state or employer pension schemes.
- Savings: When there is no Social Security, developing a substantial retirement savings strategy can compensate. Use 401(k) plans or IRA.
- Spousal benefits: If you have an eligible spouse who qualifies to receive social security, you can receive social security benefits even if you have not earned enough credits yourself.
Will delaying benefits help?
If you are entitled to Social Security benefits and delay your claim, you would receive higher monthly payments. Benefits increase by around 8% for every year that you wait to claim your benefits after your full retirement age, but before the age of 70. However, this approach is not applicable to all. If you do not plan to live long enough to enjoy the elevated benefits, it is more logical to claim them earlier.
Lastly, in order to receive the benefits you worked for, be sure to do the necessary paperwork properly, allow yourself enough time, and seek assistance from a financial adviser where possible.
