Founding Attorney
The Social Security Administration uses work credits to determine eligibility for disability, retirement, and survivor benefits. You earn work credits by paying Social Security taxes. Work credits affect different benefits in different ways, but you need to earn 40 work credits to qualify for retirement. You can earn up to four work credits per year.
How Work Credits Work
Under Social Security Administration rules, you earn one work credit for every $1,810 you pay taxes on per year, up to four work credits per year. This $1,810 figure is adjusted periodically. After you’ve paid taxes on $7,240 of income in a single year, you’ve earned all the work credits you can earn for that year.
You can earn all the work credits you need to qualify for retirement in 10 years, but earning more work credits will not affect your benefits. Your benefits are based on your average yearly earnings, not your work credits. However, the SSA uses work credits to determine eligibility.
How Work Credits Affect Eligibility
To qualify for benefits from the SSA, you need to meet the work credit qualifications for that benefit. These are different for different benefits. For instance:
- To qualify for retirement benefits, you need 40 work credits.
- To qualify for disability benefits, you must meet two qualifications: a recent work test and a duration work test. The recent work test specifies how many credits you need within a specific period leading up to your disability. The duration work test specifies how many years of work credits you must earn before filing for disability.
- To qualify for survivor benefits, which are paid to your family after you die, you must earn a certain number of credits before you pass away. The required number of credits varies based on age but is never more than 40.
Retirement Benefit Examples
According to the Social Security Administration, you cannot receive retirement benefits unless fully insured by the SSA, which requires 40 work credits. If you have less than 40 credits, you are not fully insured and cannot receive retirement benefits, although you can still work to earn more credits. For example:
- A person who worked for 30 years and then retired would qualify for more than 40 work credits, except that you cannot earn more than a maximum of 40. They would qualify for retirement benefits.
- A person who worked for 10 years and earned 40 work credits would still qualify for retirement.
- A person who worked for 10 years but only earned nine work credits because their income was below $7,240 in their final year would not qualify for retirement until they earned one additional work credit.
Disability Benefit Examples
Qualifying for disability benefits requires both a recent work test and a duration test, so it can be difficult to know whether you qualify without asking a Social Security disability lawyer to help you. Here are some examples:
- A 31-year-old person who has earned at least 20 work credits in the 10 years immediately before becoming disabled would meet both the recent work and duration tests and would qualify for disability benefits.
- A 21-year-old person who has earned three work credits in the three years before becoming disabled would not meet the recent work test of six credits and would not qualify for disability benefits.
- A 50-year-old person who has earned 20 work credits in the 10 years before becoming disabled and who has worked a total of seven years would meet both tests and qualify for benefits.
Survivors Benefit Examples
Your surviving family members can receive survivor benefits after you pass away if you have earned enough work credits. For example:
- If you have earned 40 work credits, your survivors can receive benefits.
- If you earned six credits in the three years before you passed away but have not earned 40 work credits, your surviving spouse can still receive survivor benefits if they care for your children.
Contact a Social Security Law Firm Today
If you want to find out if you would qualify for SSA benefits based on your work credits, a Michigan Social Security lawyer can help. Contact Grech Law Firm today for the assistance you need.