The minimum Social Security benefit calculation was developed to help certain low-income workers boost their benefit amount. It looks at years of coverage in place of someone’s earnings to estimate how much they might receive from Social Security. The special minimum benefit in 2024 starts at $50.90 for someone with at least 11 years of coverage and goes to $1066.50 for workers with 30 years of coverage.
What is the Social Security Special Minimum Benefit
The special minimum Social Security benefit was created in 1972. It is a minimum Primary Insurance Amount (PIA) that provides benefits to certain low-income workers. This minimum benefit is specifically designed to help people who have lower lifetime earnings overall. However, these benefits are calculated based on years of service, not earnings.
Unlike the standard Social Security benefit, which is based on an individual’s average indexed monthly earnings (AIME) over their 35 highest-earning years, the Special Minimum Benefit is calculated based on the number of years a person has worked and paid Social Security taxes.
Who qualifies for the Social Security Special Minimum Benefit
Eligibility for the Special Minimum Benefit is based on several key factors:
- Years of Coverage: To qualify, an individual must have at least 11 years of coverage. A year of coverage is defined as a year in which the person earned a minimum amount and paid Social Security taxes on those earnings. The minimum earnings threshold changes annually based on national average wage growth.
- Age and Residency: Applicants must be at least 62 years old and either a U.S. citizen or a legal resident to begin receiving benefits.
- Contribution History: The benefit is particularly aimed at individuals who have worked in lower-wage jobs but have consistently paid into the Social Security system.
How to Calculate the Social Security Special Minimum Benefit
A complex formula is used by the Social Security Administration to calculate the special minimum benefit based on your work history. The formula takes into consideration the number of years of coverage you have earned and a special minimum Primary Insurance Amount (PIA) table. The PIA table assigns a PIA value to each year of coverage. You can look up the special minimum PIA table for different years using the tool offered by the Social Security Administration for a special minimum benefit
Here’s a detailed breakdown of the calculation process:
- Years of Coverage: The benefit amount increases with the number of years of coverage. For example, in 2024, a person with 11 years of coverage might receive a monthly benefit of $51, while someone with 30 years of coverage could receive approximately $1,067 per month.
- Adjustment for Retirement Age: Benefits are adjusted based on the age at which an individual begins to draw Social Security. Starting benefits before the full retirement age (FRA) will result in a reduced monthly benefit while delaying benefits past the FRA can increase the monthly amount due to delayed retirement credits. In 2024, the full retirement age is 66 years for those born in 1958.
- Cost-of-Living Adjustments (COLA): The Special Minimum Benefit, like regular Social Security benefits, is subject to annual COLA to keep pace with inflation. For 2024, the COLA increase is 3.2%, slightly boosting benefit amounts.
