One of the biggest misconceptions about Social Security is that everyone is entitled to Social Security once they reach a certain age. In reality, Social Security is what you get. Specifically, it is earned by paying into the program through taxes on your payroll.
To qualify for Social Security benefits in retirement, you must accumulate 40 work credits during your lifetime. You can also earn up to 4 credits per year.
This year, every $1,640 in earnings qualifies you for one work credit. But next year, you’ll need $1,730 to qualify for the work credit. This is an important detail to keep in mind if you are working very part-time.
Make sure you have sufficient income
People who work full time usually don’t have to worry about not earning enough to earn four Social Security work credits in a year. The federal minimum wage is $7.25 per hour. If you work 40 hours a week, that’s $290 a week, or if you work 50 weeks, that’s $14,500 a year.
Meanwhile, to earn four Social Security work credits in 2024, you would need to earn $6,920. So while minimum wage workers may have their fair share of financial hardship, those who work full time at that salary level still qualify for the greatest number of Social Security benefits. work credit.
However, if you work significantly part-time and your goal is to receive regular Social Security benefits in retirement, it may be beneficial to keep in mind your income and hours worked in 2024. However, the good news is that all the money you earn and pay taxes on counts for Social Security purposes. So, if you decide to increase your income by participating in the gig economy, that income will count as long as it is reported and taxed.
There are other ways to qualify for Social Security.
Many people will apply for Social Security benefits based on their wage history after retirement. But if you ultimately don’t accumulate enough work credits to qualify for benefits on your own, you may still have the option to collect Social Security.
If you’re married to someone who qualifies for Social Security, you can usually qualify for spousal benefits, which pay 50% of what your spouse collects each month. If you divorce, you may also be entitled to spousal benefits from Social Security based on your ex-spouse’s record.
Stay informed of changes
A number of Social Security rules will change in 2024, including the amount of income required to qualify for work credits. Even if you don’t receive benefits, it’s still helpful to read up on the changes to the program. Even if you are many years away from reaching retirement age, you may be affected by the update.
For example, next year’s Social Security wage cap will increase, meaning high-income earners will have to pay taxes on more of their income. If you’re someone who’s worried about barely being able to make the $6,920 she needs to receive four work units, that’s not a change that will affect you. But it’s still good to have knowledge.