How to qualify for Social Security retirement benefits

More than 60 million Americans depend on Social Security as part of or all of their income during retirement. This means that at least one in every six Americans collects Social Security every month. If your job is covered by social security, you will be eligible to apply for social security benefits when you retire. 

You can qualify for Social Security retirement benefits if you are age 62 or older, and you have accumulated enough work credits. You need at least 40 credits to qualify for Social Security benefits, which is equivalent to 10 years of work if you earn the full credits each year. You can earn up to 4 work credits for each calendar year you earn an income and pay Social Security taxes.

Who is eligible for Social Security retirement?

To be eligible for Social Security retirement, you must work and pay Social Security taxes to the Social Security Fund. By earning a wage and paying Social Security taxes, you earn work credits that are required to qualify for Social Security income.

Typically, you can earn up to 4 credits per calendar year based on your annual earnings, and you will qualify to receive Social Security benefits when you reach 40 lifetime credits. For 2022, you earn one credit for every $1,510 in income in which you pay Social Security taxes. You can earn up to 4 credits by earning at least $6,040 in annual income. The income required to earn work credits is adjusted each year for inflation.

You can start claiming retirement benefits when you reach age 62. While you can decide to start taking retirement benefits at age 62, the benefits you receive will be lower than what you receive at your full retirement age. If you wait until your full retirement age to receive retirement benefits from Social Security, you will receive the full benefit.

How to calculate your Social Security benefits

The Social Security Administration (SSA) uses your 35 years of earnings to calculate your primary insurance amount (PIA). PIA is the monthly income you will receive once you attain the full retirement age. SSA considers your highest 35 years of earnings to calculate your Average Indexed Monthly Earnings (AIME). If you worked for less than 35 years, SSA will enter zero for each year with no earnings.

If you decide to continue working after reaching the full retirement age, SSA will recalculate your benefits for each year you work. If the income you earn is greater than any of the 35 years of earnings, your benefits will be calculated and adjusted upwards.

There is a limit on the Social Security income you can receive. In 2022, a person who is taking Social Security benefits at age 62 can receive a maximum benefit of $2,364, while people retiring at the full retirement age can receive a maximum of $3,345. If you delay taking Social Security until when you reach age 70, you will receive a maximum Social Security benefit of $4,194.

Who qualifies for spousal benefits?

You may be eligible to receive spousal benefits if you are married, formerly married, divorced, or widowed. If your spouse has applied or is receiving Social Security, you may be eligible to claim spousal benefits. You must be at least age 62 or older, or caring for a child who is eligible to receive Social Security. You can receive up to 50% of your spousal’s normal benefit.

When claiming spousal benefits on your spouse’s Social Security, you will essentially be applying for Social Security benefits on your own work history. If your work history gives you a higher benefit than the spousal benefit, you will receive the higher benefit. However, if the spousal benefit is higher than your Social Security benefit, you will get the spousal benefit.

While the spousal benefit is based on your spouse’s normal benefit, the amount you receive depends on the age when you claim the benefit. You can collect spousal benefits starting from age 62, but you will receive reduced benefits compared to the amount you would receive at your full retirement age. The retirement benefits increase for each year you delay. However, if you are caring for a minor or a child who qualifies for Social Security disability benefits, you will receive the full spousal benefit.

When should you apply for Social Security benefits?

You can apply for Social Security benefits starting from age 62. However, the benefits you receive will be 30% less than what you will receive if you delay taking benefits until your full retirement age.

If you wait until the full retirement age, you will receive the full benefit from Social Security. Typically, the full retirement age ranges from age 66 to 67 depending on your year of birth. If you delay taking Social Security until age 70, your monthly benefits will increase every year until you reach age 70.

When deciding when to collect Social Security benefits, you should consider your individual circumstances, life expectancy, when you plan to retire, and what other income streams you have to supplement your Social Security benefits.