To determine an individual’s qualification for benefits, the Social Security Administration (SSA) calculates the full retirement-age benefit based on the 35 most significant years of income. The income is adjusted and plugged into an equation to generate the amount of benefit. What if someone only worked significantly fewer years, however? Do you receive Social Security if you have only been employed for 10 years?
The reply is yes but with huge qualifications. Yes, you can qualify for Social Security with only 10 years of work, but you will receive less than if you had worked and contributed to the system for more than 10 years. Here is what you should know about qualifying for Social Security with a brief work history.
Earning Social Security credits
To be eligible for Social Security, you must gain credits from the work that you have done. The SSA dictates that one has to have earned 40 credits to be eligible to receive retirement benefits. These are gained through Social Security taxes being paid on wages. A person can earn four credits per year, which usually means that 10 years of work is generally required to be qualified for benefits.
Although not all employees accrue credits the same, the requirement to accrue a credit differs from year to year. As of writing in 2022, one credit equals $1,510 in compensation, so an employee must earn up to $6,040 in a calendar year to accrue the maximum four credits. Even those who work part-time can earn their credits as long as they are paying Social Security taxes.
For those who have not worked enough to have earned at least 40 credits, Social Security benefits will be unavailable. Certain government employees exempt from paying Social Security taxes may also be ineligible, although they have worked for decades. What this amounts to is that simply having work experience is not enough—you have to have contributed to the Social Security system in the form of payroll taxes.
How fewer years of work impact benefits
Social Security benefits are calculated using a worker’s highest-paying 35 years. If the worker has fewer than 35 years of earnings, the SSA will fill in the gaps with zeros. This translates to a lower total benefit than workers who have a full 35-year work history.
For example, in 2022, a worker who claims Social Security at full retirement age (either 66 or 67, based on the year of birth) can qualify for a maximum monthly benefit of $3,345. This is, however, based on a worker who has contributed to Social Security at the highest taxable wage rates for 35 years. For someone who has only worked 10 years, the benefit level will be considerably lower since the 25 absent years will be calculated as zero earnings in the SSA’s calculation.
Workers who delay retirement past full retirement age can receive more benefits. Waiting until age 70 to take Social Security, according to AARP, allows retirees to receive the maximum possible benefit. In 2022, the maximum possible Social Security benefit at age 70 is $4,194 per month. To qualify for this, however, a worker would have had to earn at least $147,000 per year (in today’s dollars) over a 35-year working life.
For most retirees, Social Security replaces only a portion of their pre-retirement income. On average, a retiree’s Social Security check will replace about 40% of his or her previous earnings. This highlights the necessity of supplementing Social Security with other sources of retirement income, such as pensions, savings, and investments.
Estimating your social security benefits
To determine how much you can anticipate receiving in Social Security benefits, the SSA provides online calculators to project future benefits. Maybe the best way to review your potential benefit is to create a Social Security account on the SSA website. Using this instrument, you can see an individualized estimate of your future benefits based on your actual earnings record.
In addition, third-party calculators, like the AARP Social Security Calculator, are available to make quick estimates using general information about your work record and projected retirement age.
Understanding how Social Security benefits work—especially for people with fewer years of earnings—can help retirees plan their retirement finances effectively. Regardless of whether you’ve earned 10 or 35 years, understanding your benefit entitlement and potential monthly amount can help you make informed choices about retirement.
