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Understanding Social Security Credits

Each year you work and pay into the Social Security system, you earn Social Security credits. These credits are crucial for determining your eligibility for various benefits. In this article, we will explore what Social Security credits are, how they affect your future benefits, and how you can maximize them.

What Are Social Security Credits?

Social Security credits are used by the Social Security Administration (SSA) to determine your eligibility for benefits such as retirement, disability, Medicare, or survivorship benefits. These credits do not impact the amount of benefits you receive; rather, they determine if you qualify for these benefits.

How Do You Earn Social Security Credits?

You earn credits by working and paying Social Security taxes. Whether you are self-employed or employed part-time or full-time, you can earn up to four credits each year. For 2024, every $1,730 earned equals one credit. Your credits remain on your record forever, even if you leave the workforce or change careers.

How to Find Out How Many Credits You Have

To check your credits, create an online account on the SSA’s website or call the SSA at 800-772-1213. Note that not all work counts toward Social Security, such as certain state and local government jobs, and some federal employees hired before 1984.

How Do Social Security Credits Affect Future Benefits?

The number of credits you need varies by the type of benefit and your age. No benefit requires more than 40 credits.

Retirement Benefits

To be eligible for retirement benefits, you need at least 40 credits, which can be earned in 10 years of work. If you haven’t earned enough credits, you may still qualify through your spouse’s work history.

Disability Benefits

For Social Security Disability Insurance (SSDI), the required credits depend on your age when the disability started. For example, if your disability began before age 24, you need at least six credits in the prior three years.

Survivors Benefits

Your family may be eligible for survivors benefits if you pass away. The required credits depend on your age at death, with younger workers needing fewer credits.

Medicare

To qualify for Medicare, you or your spouse need 40 credits. If you don’t have enough credits, you may still get coverage but at a cost.

How to Maximize Social Security Credits

To maximize your credits, work consistently and pay Social Security taxes. Credits determine eligibility, not the amount of benefits. Delaying retirement can increase your monthly payments, so consider waiting if possible.

Prepare for Retirement Elsewhere

Social Security should be part of your retirement plan, but not your only source of income. Save in investment accounts like 401(k)s and IRAs to ensure a comfortable retirement.

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