Eligibility Requirements for Social Security Retirement Benefits

At the NSSA® Certificate program, we emphasize Situational Social Security because every client is unique. Your clients may be single, married with wide or narrow age differences, divorced, surviving spouses, eligible to file a Restricted Application, or public employees. As a trusted advisor, you must understand the issues and questions that relate to each unique client. Advisors who participate in the National Social Security Advisor Certificate program change their mindset and become proactive. NSSA® Advisors don’t wait for clients to bring up Social Security; they are confident in their knowledge and initiate the discussion. Which type of advisor are you? Hesitant to discuss Social Security? Confident in your understanding? Proactive?

In this installment of Situational Social Security (SSS), we discuss the eligibility requirements to receive Social Security retirement benefits.

There are only two requirements to become eligible for Social Security retirement benefits:

1. Forty Credits:
   To qualify for Social Security retirement benefits, a client must earn 40 credits. A maximum of four credits can be earned per year, meaning it takes at least 10 years of part-time work to earn 40 credits. The Social Security Administration (SSA) previously referred to this requirement as "quarters," but it is now known as "credits."

   A credit is earned based on earned income (wages and net self-employment income), not by working in every quarter. In 2020, one credit is earned with $1,410 of earned income. If a person earns $5,640 in 2020, they will receive four credits, regardless of when the income is earned—whether it's over the course of twelve months or all in January. Some advisors mistakenly believe clients must work in every quarter to earn credits, but this is not the case. Clients earn credits based solely on having earned income. For example:

   • Earning $1,410 will provide one credit.
   • Earning $2,820 will provide two credits.

   Consider this scenario: Your clients, Tom and Cindy, come to your office to discuss their Social Security benefits. After reviewing their Social Security benefit statements, you see that Tom is eligible for retirement benefits because he has earned more than 40 credits. Cindy, however, only has 36 credits. How can Cindy obtain the four additional credits needed to qualify for her own Social Security retirement benefits? Qualifying for her own benefits could allow Tom to wait until his Full Retirement Age (FRA) or longer (up to age 70) to claim his benefits, potentially resulting in higher benefits for himself and an increased widow benefit for Cindy.

   If Cindy works in 2020 and earns $5,640, she will receive the additional four credits. She can earn this amount in just one month and not work another day for the rest of the year. If Cindy only has 32 credits, she could work in both 2020 and 2021 to obtain the eight additional credits needed. If Tom owns a business, Cindy could do some administrative work to earn compensation and gain the necessary credits. As a trusted advisor, it is essential to understand how credits are earned and how you can help your clients obtain the necessary credits to qualify for retirement benefits.

2. Must Have Attained Age 62 for the Entire Month:
   What does it mean to have “attained” age 62? There is a difference between turning age 62 and attaining age 62. A person turns 62 on their birthday, but they attain age 62 the day before their birthday. For example, if Albert turns 62 on June 18th, he actually attains age 62 on June 17th. Clients must have attained age 62 for the entire month to be eligible for Social Security retirement benefits. If Samantha turns 62 on June 18th, she would not be eligible to begin Social Security retirement benefits until July. Only individuals born on the 1st or 2nd of the month are eligible to begin their retirement benefits in the month they turn 62. Everyone else is not eligible until the month after they reach age 62. For instance, if I was born on February 13th, I would not be eligible to begin my benefits until March.

Therefore, to qualify for Social Security retirement benefits, your clients must have earned 40 credits and have attained age 62 for the entire month. The next question is, when will the SSA begin sending your clients their Social Security benefits? Your clients must file for benefits. The Social Security Administration will not automatically send benefits upon reaching age 62 or 70. Your clients must file to receive their benefits.

The content on this blog is for informational purposes only and is not legal, financial, or professional advice. Social Security rules change periodically, so some information may become outdated. For the most accurate advice, consult a certified National Social Security Advisor (NSSA®). Social Security Professionals, LLC, and NSSA® are not responsible for any errors, omissions, or actions taken based on this blog's content. Use of this blog does not create a client relationship, and all information is provided "as is" without guarantees. By using this blog, you agree to hold Social Security Professionals, LLC, and NSSA® harmless from any claims or liabilities arising from its content. For personalized guidance, contact an NSSA® professional.