Every year Social Security updates some of the numbers associated with your benefits. Here are the current requirements to qualify for Social Security benefits.
The Social Security Administration is a U.S. government agency that provides income to retirees, survivors, and the disabled that have worked. Each division provides a particular service and has different eligibility requirements.
Payroll Tax Distribution Social Security is funded mainly by payroll tax. You contribute 6.2% of your earnings, and your employer matches that, for a total of 12.4% paid on your behalf. Once collected, the tax is divided between two Social Security Funds: the OASI and DI.
OASI, Old Age and Survivor’s Insurance, is the retirement and survivor portion of Social Security. It currently receives 10.6% of the payroll tax collected.
DI, Disability Insurance, may cover qualified workers and their families in the event one becomes disabled. Not all disabled individuals are eligible for DI.
You must meet basic Social Security eligibility requirements and specific medical criteria. The Disability Insurance Fund receives 1.8% of the payroll tax.
To be eligible for Social Security Retirement or Disability benefits:
- You must have earned 40 credits during your work career. You receive one credit for every $1,360 (updated for 2019) earned with a maximum of four credits per year. Generally, you must have earned four credits per year for at least 10 years to receive benefits.
- For OASI, you must be at least 62 years of age. For survivor benefits, you must be at least 60 years old (widow or widower). There is no age requirement for Disability Insurance, but you must have a qualifying disability.
Social Security payment amounts are based on earned income. The higher your earnings, the higher your monthly payment will be until the maximum, which is $2,861 (updated for 2019) at Full Retirement Age. Working off the books or not paying tax on your full income when self-employed can lead to a diminished monthly payment later on.
Full Retirement Age used to be 65 but now depends on the year you were born. If you were born 1943-1954, your Full Retirement Age is 66. For those born 1955 -1960, the Full Retirement Age will gradually increase to 67.
The maximum income taxed in 2019 is $132,900. After that amount, neither you nor your employer pay Social Security tax on additional income.
If you are collecting disability from Social Security, once you reach your Full Retirement Age, you will be switched from disability to retirement benefits. The payment amount will stay the same as the two are calculated with the same formula.
As a worker, if you have not contributed enough to Social Security to earn 40 credits, you will not qualify for retirement benefits. If you are disabled though, the number of credits needed may be less depending on your age and number of credits you have accumulated.
Social Security is based on your lifetime earnings – not on your current income – and the age you decide to retire.