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"Part-Timers: Check Your Social Security Credits" by Julie Jason

Originally published: July 30, 2023 (distributed by Andrews McMeel Syndication)

If you are currently working part time, are you concerned about qualifying for Social Security retirement benefits?

     It’s all about “credits” -- and the way to earn credits has changed over time. You may be surprised to learn how “quarters” are earned. Let’s dive into some history. 

     According to the Social Security Administration (SSA) website: “You must earn at least 40 Social Security credits to qualify for Social Security benefits. You earn credits when you work and pay Social Security taxes” (tinyurl.com/ycxbzc4f).

     The credits determine “your eligibility for retirement or disability benefits, Medicare, and your family’s eligibility for survivors benefits when you die.” 

     Very simply, the Social Security Administration “cannot pay benefits to you if you don’t have enough credits,” quoting the SSA.gov website.

     How are credits earned? 

     Credits are based on your total wages and self-employment income for a particular year. 

     The current method for calculating credits came into being in 1978. 

     Before then, the system was based on quarters per year, with a person being credited with a quarter of coverage “for each quarter in which wages of $50 or more were paid,” according to SSA.gov (tinyurl.com/mrywevnx). A person could also be credited with four quarters of coverage “for every taxable year in which $400 or more of self-employment income was earned.” 

     The change for 1978 came through amendments to the Social Security Act of 1935 that were passed by Congress and signed into law in December 1977 (tinyurl.com/yn8f7hbm). Employers started reporting wages on an annual basis instead of a quarterly one. As a result, a quarter of coverage was credited “for each $250 of an individual’s total wages and self-employment income” for 1978, according to SSA.gov, with the maximum number of credits being four per year. 

     Also, after 1978, the amount of earnings needed for a quarter of coverage became tied to changes in the national average wage index (tinyurl.com/38ywc5bu). (For the formula for calculating earnings, see SSA.gov’s Quarter of Coverage page.) 

     How has the earnings figure increased for quarterly coverage? In 1979, the amount was $260 to earn one quarter of coverage (a maximum of $1,040 needed for four quarters), and by 1988, it was $470 ($1,880 for four quarters). Now, you earn a quarter of coverage with $1,640 of earnings. To qualify for four quarters, you need $6,560. 

     So, here it is: Quarters aren’t connected to the calendar anymore. All you need to do is earn at least $6,560 by the end of 2023 to earn four credits, which is the maximum one can earn per year. 

     How much will you receive as a retirement benefit? Pocketing additional credits won’t help. Actual earnings will.  

     “The average of your earnings over your working years, not the total number of credits you earn, determines how much your monthly payment will be when you receive benefits,” according to SSA.gov.

     How can you check your expected benefit? Take a look at your Social Security Statement at SSA.gov. You’ll need to create a “my Social Security” account if you don’t already have one (tinyurl.com/n8ce5jsa). The account will allow you to access the statement, which will detail if you have earned enough credits to qualify for Social Security retirement benefits. See a sample at tinyurl.com/y99dxahb. An older sample that features someone who has not yet earned enough credits can be seen at tinyurl.com/5bbzxcvf.

     Another helpful resource is an SSA fact sheet, “How You Become Eligible for Benefits,” at tinyurl.com/3x36efp5.

There are 26 million part-time workers (people who usually work less than 35 hours per week) in the United States, according to the Bureau of Labor Statistics’ numbers for June 2023 (tinyurl.com/2s362wst). 

     If you are one of them, make every effort to earn at least the amount needed for four credits ($6,560 in 2023). Continue on that path for another nine years, and you’ll have the 40 credits you need to qualify for Social Security retirement benefits.