Paid 'Under the Table' - Can I Still Receive Social Security?

If you've worked as a household employee and received your pay 'under the table,' you might wonder about your eligibility for Social Security benefits when you retire. The answer is not straightforward and depends significantly on your marital status, work history, and how your income was reported.

Scenario 1: Married Workers

If you are married or were married but are now divorced, you might be eligible for Social Security benefits based on your spouse’s work record. Typically, you can receive up to 50% of your spouse's benefit amount at retirement age. However, there are a few criteria:

• Divorced individuals must have been married for at least 10 years, should not be currently remarried, and their ex-spouse must have contributed to Social Security.
• Married individuals whose spouses have paid Social Security taxes can claim benefits based on their spouse's contributions.

Scenario 2: Single Workers

For those who are single and have not made Social Security contributions through payroll taxes, eligibility for benefits is unlikely unless they have at least 40 quarters (10 years) of work for which Social Security taxes were paid.

Earnings and Benefit Adjustments

Once eligible, you can start receiving benefits while continuing to work, subject to certain limits:

• If you have reached your full retirement age (now adjusted to between 66 and 67 years based on birth year), you can earn up to $51,960 in 2024 without reducing your Social Security benefits.
• For those aged between 62 and full retirement age, your benefits will be reduced if you earn more than $19,560.

Importance of Reporting Your Income

The Social Security benefits you receive are calculated based on your highest paid 35 years of work. If you've worked fewer years, your benefit will be computed by spreading your actual earnings over 35 years. For instance:

• If you worked 12 years with reported earnings of $40,000 annually and file for benefits at full retirement age, your average monthly earnings calculation would be around $1,371.43, leading to a monthly benefit of approximately $1,086.
• If you worked a full 35 years with the same annual earnings, your monthly benefit would significantly increase to about $1,920. That's an impactful difference for your retirement, underscoring the importance of reporting your income and paying into Social Security.

Long-Term Impact

Considering the potential decades of retirement, understanding, and planning for Social Security benefits is crucial. The Social Security Administration provides resources tailored to help you grasp how today's decisions affect your future. Particularly for women, who statistically live longer, maximizing Social Security benefits through proper planning and reporting can enhance financial security in later years.

At HomeWork Solutions, we're committed to being a part of your support system, helping you handle the financial aspects of household employment with ease and confidence. Let us help you secure a stress-free financial future so you can focus on what matters most: enjoying your retirement years.