What Are Social Security Credits and How Do You Earn Them?
Understand Social Security credits: the measure of your work history that determines eligibility for crucial future government benefits.
Social Security credits represent units earned through work that form the foundation for future Social Security benefits. These credits are not a monetary value but rather a measure of an individual’s work history over time. They are a fundamental component of the Social Security system, determining eligibility for programs. Without accumulating a sufficient number of these credits, individuals may not qualify for the benefits they or their families might need.
Understanding Social Security Credits
Social Security credits are also commonly referred to as “quarters of coverage.” They are essential building blocks for determining eligibility across different Social Security programs. These credits are earned based on an individual’s annual earnings, with a maximum of four credits obtainable each calendar year. The system requires these credits to demonstrate a sufficient and consistent work history, ensuring individuals have contributed before drawing benefits.
Even if an individual earns a very high income, they can still only earn a maximum of four credits in any given year. This structure means a person cannot accelerate eligibility by earning a large sum quickly; instead, it emphasizes sustained contributions. These credits establish a verifiable record of participation in the Social Security system through covered employment or self-employment. This ensures benefits are distributed to those who have contributed over their working lives.
Earning Social Security Credits
Individuals earn Social Security credits by working in jobs where they pay Social Security taxes or by being self-employed. For 2024, earning $1,730 in covered wages or self-employment income is enough to receive one Social Security credit.
Regardless of higher earnings, an individual can only earn a maximum of four credits in a single year. For instance, earning $6,920 ($1,730 x 4) in 2024 grants the maximum four credits. This earnings threshold typically adjusts each year to reflect changes in the national average wage index. The Social Security Administration announces the updated amount annually.
Qualifying for Benefits
The number of Social Security credits required for benefits varies by program and individual circumstances. For retirement benefits, most individuals need 40 credits, which generally translates to 10 years of work. This signifies being “fully insured,” making the individual eligible for retirement benefits.
For disability benefits, credit requirements depend on the individual’s age at disability. Younger workers may need fewer credits; for example, those disabled before age 24 typically need 6 credits earned in the three years before disability began. Older workers generally need 20 credits in the last 10 years and must be fully insured. Some benefits, particularly for survivors, may only require the worker to be “currently insured,” meaning they earned at least 6 credits during the 13-quarter period ending with their death or disability.
Credits earned by a deceased worker can also qualify family members, such as a surviving spouse or dependent children, for benefits. The specific number of credits needed for survivors’ benefits depends on the worker’s age at death and the relationship of the survivor. This ensures a worker’s contributions provide a safety net for their loved ones.