When you work for most of your adult life, you deserve to live comfortably and securely when you retire.
Social Security helps to make sure of that. If you qualify for Social Security benefits after you retire, then you will receive monthly checks from the government to help you meet your monthly living expenses. Qualifying for Social Security benefits is easy. You simply need to have worked a certain number of years and earned a minimum income. How much you earn in Social Security benefits depends on how long you work before retiring and how much income you earned in that time.
There are certain special circumstances that could influence your qualifications for Social Security benefits. Among the most common of these are being forced to stop working before retirement due to disability, earning most of your income outside the United States or delaying retirement. When to retire is a critical life decision. However, knowing if or when you qualify for Social Security benefits and how much you qualify for at that time can help you tremendously to make the right decision.
Whether you qualify for Social Security benefits and how much in benefits you qualify for depends on how long you have paid Social Security taxes on your work income. If you have not worked and, therefore, not paid any Social Security taxes, then you will not be eligible for Social Security benefits.
As you pay Social Security taxes while working, you earn credits. The number of credits you accumulate by the time you retire will then determine your eligibility for Social Security benefits. How many credits you need to qualify for Social Security benefits will vary according to the year you were born. However, as long as you were born after 1928, you need 40 credits or 10 years of work in order to qualify for benefits. If you leave or lose your job before you earn enough credits to qualify you for Social Security benefits, then those credits remain on your SSA record. When you return to work, you will simply start adding credits to the amount you had when you left off. Likewise, if you stop working before you reach the legal minimum retirement age to start receiving Social Security benefits, which is 62 years of age, then those credits will remain on your record until you reach that age and can start receiving benefits.
How much in benefits you qualify for is based on how much you earned over the qualifying periods, those being any in which you earned credits. The more you earn over your working life, the more in Social Security benefits you will be entitled to receive when you retire. The longer you continue to work after you turn 62 years of age, the higher your retirement benefits will be compared to if you retire at age 62 years of age. The more steadily you work during your working years, the higher your benefits will be, compared to if you worked intermittently. Regardless of how much in Social Security benefits you qualify for, you should still prepare and save for retirement independently of the government.
If you initiate the process of applying for Social Security retirement benefits at 62 years of age, then it is considered early retirement and your retirement benefits will be lower than if you had waited until you reach the full retirement age. Your full retirement age will depend slightly on the year you were born. Generally speaking, it is approximately 66 to 67 years of age. If you were born after 1959, then your full retirement age is 67 years of age. If you wait until your full retirement age to retire and collect benefits, then you will qualify to receive the highest possible benefit amount available to you based on your lifetime earnings. The Social Security Administration advises upcoming retirees, despite 65 years of age no longer being the full retirement age, to still enroll in Medicare three months prior to their 65th birthday.
If you stop working prematurely because of a permanent disability, then you will not be able to start collecting those retirement benefits until you reach the legal retirement age even if you have earned enough credits to qualify. However, until that time, you can apply for and may be able to receive Social Security disability benefits. Once you reach the full retirement age, your SSDI benefits will be converted to Social Security retirement benefits.
American citizens who work overseas may still qualify for Social Security benefits. You may lack sufficient credits from paying Social Security taxes on your income from work you performed in the United States alone to qualify for Social Security benefits. Fortunately, your work in any of 24 countries with which the U.S. Social Security Administration has an arrangement can also earn you credits to apply toward Social Security benefits. You should speak directly with a Social Security officer at your local SSA offices to see which of your employment situations qualified. This is also a consideration if your plan to retire abroad.
The timing of your retirement age will directly influence the amount of benefits that you qualify for. If you continue working after reaching the full retirement age and postpone receiving Social Security benefits, then you can increase your future benefits in a couple of ways. For every additional year you work beyond the full retirement age, another year of income is added to your Social Security record. Since lifetime earnings determine the amount of benefits you are eligible to receive, each extra year of income increases the amount of your future benefits correspondingly. In addition, your benefits amount increases by a set percentage automatically every year you put off collecting benefits after reaching full retirement age up until you reach 70 years of age. The percentage differs according to when you were born.
The SSA offers a Retirement Estimator tool online to help you see in advance how much you qualify for in retirement benefits. You can enter in different scenarios like changing anticipated future earnings or “stop work” dates to see the best retirement strategy for you. The SSA’s Retirement Estimator tool is free to use, although it is against the law to use it fraudulently, such as to look up the information of another person.