To qualify for certain federal programs like Social Security Disability Insurance (SSDI), survivor and dependent benefits, and Social Security retirement benefits, you need to prove you have made enough contributions to your Social Security account in the form of work credits.
These Social Security work credits show that you have “paid into” the system through your taxes, and can therefore receive benefits. For those who are unable to work or who are dependent on a working spouse or parent, there are provisions in place so that you can also receive benefits even without the required work credits.
- Social Security Retirement
- Social Security Disability
- Dependent Benefits
- Survivor Benefits
These work credits allow you to access almost all Social Security benefit programs, and while there are a minimum number of credits you must attain, there are no extra benefits available for those who have exceeded the minimum. There are also provisions in place for those who have been unable to reach the minimum number of credits due to a disability or medical condition.
Social Security Work Credits
In 1935, the Social Security Act was passed by Congress as a way to provide financial support for America’s workers, though at that time these only covered retirement benefits for people 65 and older. Since the program’s inception, it has expanded to cover disability benefits, unemployment benefits, dependent and survivor benefits, Medicare and Medicaid coverage, as well as retirement income.
There has always been a set number of work credits that workers must accumulate to be “insured” for benefits, but the amount has changed over the years. At first, this requirement was five years of work and it only applied to men because at that time there were far fewer women in the workforce. Subsequent amendments included earning work credits for military service in 1950, reduced requirements for women in 1956, followed by equal requirements for men and women in 1972.
Since 1978, the standards for work credits have been fixed where workers can earn up to four credits per year, and need 40 total credits to qualify for benefits (with some exceptions). This relatively low bar ensures more people are vested in the programs and can access services when they need them.
Most workers will earn four credits for every year they work. The Social Security Administration requires that each worker earn 40 credits in their lifetime, which means that the majority of Americans will have to work for 10 years to earn enough. Credits can be earned through wages paid by your employer, self-employment wages, as well as military service. There are also special rules about how credits are earned for those who perform domestic work, farm work, or those who work for religious organizations or non-profits that don’t pay a Social Security tax.
How fast you earn credits is based on your total wages or self-employment income. In 2022, you can earn one credit for every $1,510 in qualified income (meaning you paid Social Security taxes on it). To get the maximum of four credits, you have to earn a total of $6,040 for the year.
After you hit 40 credits, the total number you earn does not affect what benefits you get, and monthly payments are calculated by using your average earnings over your working years.
Earning work credits allow access to much needed benefits like health coverage, disability payments, retirement payments, and benefits for your family.
Perhaps the widest spread and most well known of these federal programs is the retirement benefit, which covers about 50 million Americans. Those born after 1929 and who are at least 62 need 40 work credits to qualify for their full retirement payment.
To start receiving these benefits you must fill out an application either online or in person at a Social Security Administration office. To begin receiving benefits, you can choose to retire anytime between the ages of 62 and 70.
62 is the youngest retirement age you can apply for benefits, but know that the monthly benefit will be higher for filers who wait till they have reached the “full retirement age” of 67 for those born after 1960.
Your monthly payments are calculated using your lifetime earnings, so those who have a higher income will earn more than someone with a low income. Your income will be indexed to account for increases in average wages, and the SSA will use the 35-year time period in which you earned the most. These payments are not intended to be your only source of income after you turn 65 and should ideally be used in conjunction with a pension benefit, investment account, or a private retirement saving account.
Medicare covers nearly 64 million Americans. Your work credits also allow you to qualify for this benefit. This healthcare program is available for those 65 or older, those who are blind or disabled (such as those receiving SSDI benefits), and those with certain medical conditions such as permanent kidney failure or amyotrophic lateral sclerosis (Lou Gehrig’s Disease).
“Original Medicare” covers both hospital insurance (Part A) and medical insurance (Part B). Many enrollees will qualify for premium-free Part A though they will have to pay a premium for Part B, and in 2022 this is $170.10. Those who choose Original Medicare can also elect to add a Part D prescription drug plan though this will cost extra.
There is also the option to go with a Medicare Advantage (MA) Plan which essentially bundles Parts A, B, and usually D, and many of these plans can be obtained at a zero-dollar premium. MA plans are run by private insurers who contract with the federal government to ensure the policies meet a certain standard of care.
Social Security Disability Insurance (SSDI) provides assistance to those who are unable to work due to a disability. Because people of all ages can become disabled, the amount of credits needed to qualify depends on when you became disabled.
In general, those seeking Social Security disability benefits must meet the following work credit criteria:
- If you were disabled before the age of 24, you only need six work credits
- If you were disabled between the ages of 24 and 30, you need to have worked at least half of the time between the age of 21 and the year you became disabled.
- If you’re over the age of 31, you need at least 20 credits that were earned in the 10 years leading up to your disability. Those over the age of 42 generally need two more work credits per each two-year period they were able to work up until the age of 62 when it caps out at 40 Social Security credits.
SSDI provides monthly benefits to those with long-term disabilities who are unable to work and whose condition is expected to last at least 12 months or end in death. Your benefit is calculated in relatively the same way that retirement is, based on your average earnings over time.
The SSA will look at your average earnings during your working years to determine your monthly payments. It will also take into account that many people become disabled before their peak earning years and will only count working years after the age of 22 and will throw out anywhere from one to five years to account for “dropout years.”
Applying for SSDI can be a very long process and though there are online services that can help, it can still take applicants several months to over a year depending on the complexity of their case. Many people find it helpful to hire a disability attorney to help them with this process. SSDI has a mandatory five-month waiting period for any applicant to start receiving benefits to ensure only those with true long-term disabilities are taking advantage of the program.
Even after this time, claimants can still see the application process stretch beyond five months. To address this, the SSA has implemented a disability back pay program. With back pay, applicants can be retroactively awarded payments beginning the sixth month after their application date.
Family members who are dependent on a worker may be able to earn benefits when the worker retires, becomes disabled, or passes away. These benefits are available to spouses (and in some cases ex-spouses), dependent children or grandchildren, and dependent parents.
If your spouse retires and you are over the age of 62 or caring for a child under the age of 16, you can earn a spousal benefit of up to half of what your spouse receives. If you are an unmarried dependent child under the age of 18 (or 19 if still in high school), or over the age of 18 with a disability that began before you turned 22, you can receive up to half of your parent’s retirement or disability benefits. This benefit can also apply to grandchildren who are dependent on a grandparent.
In some cases, if someone who has paid into Social Security dies, certain family members may be able to receive benefits. These survivor benefits are available to widows or widowers, unmarried children younger than 18 (or between the ages of 18 and 19 and still a full-time student in elementary or secondary school), children of any age with a qualifying disability, dependent parents over the age of 62, or in some cases a divorced spouse.
Family members can typically receive a monthly payment of 75% to 100% of what would have been paid to the deceased. Your family may also receive a one-time payment of $255 after your death if you have enough work credits. Note that some widows or widowers may be subject to the government pension offset (GPO), meaning their benefits may be reduced if the deceased spouse was earning a retirement or disability pension.
For nearly 90 years now, the SSA has been providing retirement, disability, dependent, survivor, and healthcare benefits to Americans who need them the most.
This social safety net is available to most people, even if they have only worked a short while and even if they had low earnings while they worked. Since the threshold for earning work credits is relatively low and there are provisions for those who become disabled at a young age, most people can earn enough credits to secure benefits when they need them.