If want to plan for the future it is best to understand how to qualify for social security benefits, this is vital and should not be taken for granted. To be entitled to these benefits, first of all, you must earn 40 work credits during your working time. Are you wondering what working credits are and how to earn them? Read more to get more information.
What are work credits?
The term work credits can simply be described as building blocks to your eligibility for social security benefits. This credit is used by the Social Security Administration (SSA) to determine one’s eligibility or qualifications for retirement, disability, or even survivor benefits. One keynote is that each year you work, you are making about four credits, however, this depends on the amount of money you earn.
How do you earn work credits?
For an individual to earn work credit, he or she will have to have a job or be self-employed, this job or self-employment must be subject to Social Security taxes.
Illustration: For better understanding, you earn one credit for every $1,640 in earnings in 2024. This amount will also increase slightly each year to match up with the inflation. Once you are earning $6,567 in a year, you will have a maximum of about 4 credits in a year.
Let’s follow a simple breakdown:
- 1 credit: This earns $1,640
- 2 credits: This earns $3, 280
- 3 credits earned: This earns about $4,920
- 4 credits: Earn $6, 560
One fact you should know is that if you earn this all through the year, either by spreading it to each month or you can earn it all at once.
How long does it take to earn 40 credits?
Based on calculations, you can earn up to four credits in a year, this directly means that you can earn 40 credits in 40 years. In other words, a minimum of 40 years of working experience will enable you to qualify for social security benefits.
It is best to note that, one does not have to earn these credits consistently. This means that you can work for a few years and you can go on a much-needed break and then you can continue and work again, and you will not lose your credits.
What happens after you earn 40 credits?
Once you have achieved the 40-credit landmark, you will be qualified to be fully insured by the Social Security Administration. For further understanding, this simply means that you are now eligible for social security benefits when you retire.
Once you have reached the 40 credits mark, you are also qualified for disability benefits just in case you are unable to continue working before reaching the full retirement age. If you pass on your family will also be entitled to survival benefits.
Why is earning 40 credits important?
If you earn your 40 credits you have automatically insured your retirement phase of life as well as insuring yourself in case of unforeseen eventuality. You could earn Social benefits such as disability ratings, and even survival benefits and so on. However, if you have not reached your 40 credits mark, you will not be eligible to enjoy these benefits.
