Your Social Security Benefits Questions: Social Security Credits

07/18/08

Your Social Security Benefits Questions: Social Security Credits

Q: Social Security tells me that I don't have enough credits to qualify for benefits. How do these credits work, and how is it possible for me to not have enough when I have worked for years and paid taxes the whole time?

A: When you work and pay Social Security taxes, you earn credits that are used to qualify you for social security benefits. The Social Security service bases the number of credits a person receives on the amount of money they earn and the amount of time they have worked. The necessary income level for receiving social security benefits credits rises a bit each year; as of 2008, you receive one credit for every $1,050 you earn. You can receive a maximum of four credits annually (which is why credits are also called ‘quarters'), and any credits you earn will remain on your record even during periods in which you're not working.

A certain number of credits or quarters are required in order to qualify you to receive social security benefits. The number of credits you need for social security is based on your current age, and is calculated by the number of years you have worked. If you're looking to be eligible for social security benefits for retirement (and are of more than 62 years of age), you will need to have 40 credits (the equivalent of 10 years of work).

It does occur, however, that a person of retirement age who has worked for what seems to be the correct number of years does not have enough credits to qualify him or her for social security benefits. This can happen to workers who didn't (or don't) have social security taxes deducted from their wages. In general, this sort of situation occurs with Federal employees who were hired before 1984, employees of railroads who have more than ten years of service, and the employees of governments (both state and local) which have chosen not to participate in the social security program.