Social Security is a “pay as you work” insurance plan intended to supplement any other retirement plan you have (e.g., savings, pension). As you work throughout your lifetime, Social Security taxes are taken out of your paycheck. There are two types of Social Security benefits — retirement and disability. There are various timing considerations when applying for Social Security benefits, depending on the type and amount of benefit you require.
Credits are the “building blocks” the Social Security Administration (SSA) uses to find out whether you have the minimum amount of covered work to qualify for each type of Social Security benefits. If you stop working before you have enough credits to qualify for benefits, your credits will stay on your record. If you return to work later on, you can add more credits so that you can qualify. No benefits can be paid if you do not have enough credits. Please see the video above for more details.
When you work and pay Social Security taxes, you earn up to a maximum of four “credits” for each year. The way you earn a credit has changed over the years.
- Before 1978, employers reported your earnings every three months and we called credits “quarters of coverage,” or QCs. Back then, you got a QC or credit if you earned at least $50 in a three-month calendar quarter.
- In 1978, employers started reporting your earnings just once a year. Credits are now based on your total wages and self-employment income during the year, no matter when you did the actual work. You might work all year to earn four credits, or you might earn enough for all four in a much shorter length of time.
- The amount of earnings it takes to earn a credit has changed since 1978. In the year 2021, you must earn $1,470 in covered earnings to get one Social Security or Medicare work credit and $5,880 to get the maximum four credits for the year. You can check out the Social Security website —www.ssa.gov/benefits/retirement/planner/credits.html — to determine how much you will need to earn in any given year in covered earnings to get one Social Security or Medicare work credit and how much you will need to earn to get the maximum four credits per year.
To qualify for Social Security retirement benefits, you need to earn at least 40 Social Security credits. The number of work credits you need to get retirement benefits depends on your date of birth.
- If you were born in 1929 or later, you need 40 credits (10 years of work).
- People born before 1929 need fewer than 40 credits (39 credits if born in 1928; 38 credits if born in 1927; etc.)
You may claim early benefits starting at age 62, but they will not be the full benefits you would receive by waiting for your full retirement age. The full retirement age (FRA) is 65-67, depending on when you were born. For those born before 1938, the age is 65 and for those born in 1938 or later, the FRA gradually increases by monthly increments. If you were born in 1960 or later, your FRA is 67. To determine your retirement age, visit the Social Security website here.
Social Security benefits are not paid automatically. You must fill out forms and provide certain documentation such as your birth certificate, Social Security card, etc. You should apply four months before you want to begin receiving your benefits. You can apply online, visit your local Social Security office, or call 1-800-772-1213 to get started.
Because the system is based on how much you put into it, the benefits you receive are dependent on factors such as how long you’ve been in the workforce, how much you earned, and the age at which you decide to begin receiving your benefits. If you claim your benefits earlier (i.e., at age 62), they will be reduced by the number of months between the time you claim your early benefits and your FRA. This reduced amount will be your permanent monthly payment (meaning it won’t increase when you hit your FRA) and could mean a maximum of a 25 percent reduction from your full benefit amount. Spouses and ex-spouses may also collect up to 50 percent of their spouse’s (or ex-spouse’s) benefits. You can use the online Retirement Estimator to get immediate and personalized retirement benefit estimates to help you plan for your retirement.
Because the system is based upon the top 35 years of your earning career, you should try and earn as much as you can. Another way to maximize benefits is to wait until you reach your full retirement age before claiming them.
Yes, you can continue to work while you are collecting your benefit, but your monthly benefit amount could initially be reduced, depending on the amount of income you earn between age 62 and your FRA. Once you reach your FRA, your benefits will no longer be reduced if you continue to work.
A portion of Social Security benefits is subject to taxation depending on your income. Your income — including benefits, dividends, distributions, interest, and employment — will determine how your benefits are taxed.
Social Security’s Trust Funds still have plenty of reserves. At the end of 2013, the combined Social Security Trust Funds held almost $2.8 trillion in assets, and they continue to grow. For more details, please read the article, “Is Social Security Going Bankrupt?” on our blog.
Spousal Benefits
As a spouse, you can claim a Social Security benefit based on your own earnings record, or you can collect a spousal benefit that will provide you 50 percent of the amount of your spouse’s Social Security benefit as calculated at their FRA. You are automatically entitled to receive the benefit that provides you the higher monthly amount; either a benefit based on your own earnings or the spousal benefit. Even if you have never worked, under Social Security, you may be able to get your spouse’s retirement benefits if you are at least 62 years of age and your spouse is receiving retirement or disability benefits.
If you have reached your full retirement age (FRA), you can choose to receive only your spouse’s benefits and continue accruing delayed retirement credits on your own Social Security record. You could then file for your own benefits at a later date and receive a higher monthly benefit based on the effect of delayed retirement credits. However, a spouse cannot elect to receive spousal benefits below his/her retirement age and later switch to her own benefits.Spousal benefits are reduced for those who file before their own FRA. For example, a spouse whose FRA is 66 could receive 35 percent of the worker’s unreduced benefit at age 62. The amount of the benefit increases at later ages up to the maximum of 50 percent at the FRA.One exception: if a spouse is taking care of a child who is under age 16 or disabled and gets Social Security benefits on your record, your spouse gets full benefits, regardless of age.
Assuming your spouse has already filed for benefits and your full retirement benefit is less than 50% of your spouse’s full benefit, you can file for the spouse’s benefits even though your spouse is not yet at the FRA. The amount of reduction is based on your age at the time you claim the benefit.
The answer is no. However, if the higher-earning spouse wants to continue delaying taking benefits past his or her FRA, he or she could do what is called a file-and-suspend.Here’s how the “file-and-suspend” works:
- The higher-earning spouse files for benefits at his FRA but immediately files a notice to suspend benefits.
- The lower-earning spouse elects to receive spousal benefits.
- The higher-earning spouse continues to accrue higher payments for whatever point he elects to begin receiving benefits.
No, it’s not possible to switch if she files on her own account before her full retirement age.
Social Security will pay a person’s own benefit first, before paying the spouse’s benefit. Your wife will not receive the full spouse’s rate because of her own benefit level, which is reduced as a result of filing early. The Social Security Administration will add the spousal benefit to her own benefit to arrive at her new, higher benefit amount.
If your wife’s full Social Security benefit is less than 50 percent of your full benefit, she may be eligible for spousal benefits on your record (assuming that you already have filed for benefits). Since she is still working, there is a limit on how much she can earn and collect all benefits payable.
Yes, you can file solely for the Spousal Benefit since you indicate that your wife has already filed and suspended – you can then both file for your own retirement benefits at age 70. You don’t need to (and should not) file and suspend – only file for the Spousal Benefit at this time. Also – your decision to file for the Spousal Benefit would have no impact on your future retirement benefit (or your wife’s) since you both are past your Full Retirement age (FRA) of 66.
Disability Benefits
The number of work credits needed for disability benefits depends on your age when you become disabled. Generally you need 40 credits, 20 of which were earned in the last 10 years ending with the year you become disabled. However, younger workers may qualify with fewer credits.The rules are as follows:
Note:You may only claim one type of Social Security benefit. If you choose to accept the disability Social Security plan, you may not receive Social Security retirement benefits and vice-versa.Different rules apply for farm laborers, government employees, military, nonprofit employees, and household workers.You can find additional information about disability benefits in SSA’s Disability Planner.
- Before age 24–You may qualify if you have six credits earned in the three-year period ending when your disability starts.
- Age 24 to 31–You may qualify if you have credit for working half the time between age 21 and the time you become disabled. For example, if you become disabled at age 27, you would need credit for three years of work (12 credits) out of the past six years (between ages 21 and 27).
- Age 31 or older–In general, you need to have the number of work credits shown in the chart below.
Note:You may only claim one type of Social Security benefit. If you choose to accept the disability Social Security plan, you may not receive Social Security retirement benefits and vice-versa.Different rules apply for farm laborers, government employees, military, nonprofit employees, and household workers.You can find additional information about disability benefits in SSA’s Disability Planner.
Social Security offers an online disability application. Applying online for disability benefits offers several advantages:
- You can start your disability claim immediately. There is no need to wait for an appointment;
- You can apply from the convenience of your home, or on any computer; and
- You can avoid trips to a Social Security office, saving you time and money.
- Call 1-800-772-1213 (TTY 1-800-325-0778), Monday through Friday from7 a.m. to 7 p.m.; or
- Contact your local Social Security office.
Retirement Benefits for Widows and Widowers
When a spouse dies, the survivor is entitled to receive the greater of his or her own benefit or 100 percent of the spouse’s benefit, including any cost-of-living increases earned along the way.
The number of credits you need to have family members be eligible for survivors benefits depends on your age when you die. The younger you are, the fewer credits you need, but nobody needs more than 40 credits (10 years of work).Under a special rule, we can pay benefits to your children and your spouse who is caring for the children even if you don’t have the number of credits needed. They can get benefits if you have credits for one and a half year’s work (six credits) in the three years just before your death.Note: If you are already receiving retirement or disability benefits at the time of your death, we will pay your survivors based on that entitlement. We will not have to determine your credits again.You can find additional information about survivors benefits in SSA’s Survivors Planner.
Widows and widowers can begin receiving Social Security benefits at age 60, or at age 50 if they are disabled. And they can take a reduced benefit on one record and later switch to a full benefit on the other record. For example, a woman could take a reduced widow’s benefit at 60 or 62 and then switch to her full retirement benefit when she reaches FRA. The rules vary depending on the situation, so you should talk to a Social Security representative about the options available to you.
No. Your potential entitlement to a widower’s benefit is limited to your spouse’s Social Security record only. The Social Security rules don’t permit you to file for a benefit based on the work record of a spouse from an earlier marriage.
If you were already receiving a spousal benefit, report the spouse’s death to the Social Security Administration, and they will change your payments to survivors benefits. If you were receiving benefits based on your own work, you might be eligible for higher survivor benefits, depending on your spouse’s work record. You would need to complete an application to switch to survivor’s benefits and supply an original or certified copy of the death certificate to the Social Security Administration.
Yes, Social Security rules require that you are currently single, and have been married to your ex at least ten years; at least 62 years old, which is the minimum Social Security eligibility age; and not already receiving a benefit greater than the divorced spouse’s benefit.
Retirement Benefits for Divorcees
Yes, as long as you:
- are age 62 or older;
- were married for at least 10 years;
- have been divorced for at least two years; • ex-spouse is entitled to Social Security retirement or disability benefits; • benefit that you are entitled to receive based on your own work is less than the benefit you would receive based on your ex-spouse’s work; • aren’t currently married to another person (You can collect on a deceased ex-spouse’s record if your remarriage occurred after you reached age 60.)
At age 62, the divorced spouse is entitled to between 32 1/2 percent and 35 5/6 percent of their ex-spouse’s retirement benefit depending on the divorced spouse’s full retirement age. At FRA, a divorced spouse is entitled to 50 percent of what your ex-spouse would get at their full retirement age. If the divorced spouse is receiving benefits on his/her own work record, this spouse would only receive the benefit amount from the ex-spouse if it is higher, not both.
You must be married for at least one year to a new spouse before you can file an application for spousal benefits based on their record.
No, but they have to be eligible for those benefits. (They must be at least age 62, the earliest age you become eligible for your Social Security retirement benefits.)
Yes, if your ex-spouse is younger than you, you can collect your own benefit first (because they have not yet reached age 62 so you are not yet eligible to collect on theirs) and then switch to collecting on theirs once you become eligible for theirs (which would be when they reach age 62.)
