How do I earn Social Security credits and how many do I need to qualify for benefits? SSA

The maximum earnings that are taxed have changed through the years as shown in the chart below. If you earned more than the maximum in any year, whether in one job or more than one, we only use the maximum to calculate your benefits. Although the computation of your Social Security benefit can be complicated, the basic principles underlying it are simple. 86% of Supplemental Security Income (SSI) recipients received payments because of disability or blindness in 2020. Social Security benefits are based on your 35 highest-paid inflation-adjusted years and take into consideration the age when you start receiving benefits. Approximately 70 million Americans will see a 1.3 percent increase in their Social Security benefits and Supplemental Security Income (SSI) payments in 2021.

  • However, there is a maximum allowable Social Security retirement benefit.
  • You can also choose to receive a text or email alert when there is a new notice.
  • This change means prices for goods and services, on average, are a little more expensive, so the cost-of-living adjustment (COLA) helps to offset these costs.
  • Social Security taxes phase out once you reach the maximum wage base for a given year.

Social Security Genius is a free online resource that helps individuals access information on the different types of Social Security benefits including retirement, SSI, SSDI, dependents, and survivors benefits. Your Social Security benefits would be reduced through July by $320 ($1 for every $3 you earned over the limit). Your Social Security benefits would be reduced by $10,000 ($1 for every $2 you earned over the limit). Full retirement age, or FRA, is the age when you are entitled to 100 percent of your Social Security benefits.

Average Monthly Benefit, by Sex, December 2021

Once all wages have been indexed, your average indexed monthly earnings (AIME) are computed by dividing the sum of all indexed wages by 420 (35 years expressed as months). If you worked fewer than 35 years, a zero is entered for years when you did not work. The benefit amount is fixed asset turnover ratio definition then calculated based on factors that include the year when collection begins, whether you have reached FRA, and whether you continue to work while collecting benefits. Qualifying for Social Security in the first place requires 40 work credits or approximately ten years of work.

The proportion of women aged 62 or older who are receiving benefits as dependents (that is, on the basis of their husbands’ earnings record only) declined from 57% in 1960 to 18% in 2021. At the same time, the proportion of women with dual entitlement (that is, paid on the basis of both their own earnings records and those of their husbands) increased from 5% in 1960 to 24% in 2021. Social Security’s Old-Age, Survivors, and Disability Insurance (OASDI) program limits the amount of earnings subject to taxation for
a given year. The same annual limit also applies when those earnings are used
in a benefit computation. This limit changes each year with changes
in the national average wage index. The proportion of women aged 62 or older who are receiving benefits as dependents (that is, on the basis of their husbands’ earnings record only) declined from 57% in 1960 to 19% in 2020.

  • In the SSI program, a disabled recipient is still classified as “disabled” after reaching age 65.
  • The remaining 31% were survivors or the spouses and children of retired or disabled workers.
  • While we are on the topic of marital status, divorce and remarriage can change the benefits for which you are eligible.
  • If you hope to get substantially more than that and receive the maximum, you’ll need to wait until you reach 70 to receive Social Security benefits and be a consistently high earner for 35 years.
  • Let’s say you are entitled to $1,500 in Social Security benefits a month ($18,000 for the year).

The proportion of men who are insured declined slightly from 1970 to 2021, with 91% fully insured and 80% insured for disability in 2021. By contrast, the proportion of women who are insured increased dramatically—from 63% to 88% fully insured and from 41% to 76% insured for disability. In 2021, you will pay Social Security taxes on all of your income up to $142,800. While the surviving spouse can keep the higher of the two Social Security benefits, the smaller check will go away. For those on fixed incomes, this can be a devastating financial blow. So, making smart choices now with the higher earner’s benefits and claiming strategies can be a lifesaver for the surviving spouse down the road.

Keep in mind that Roth IRA withdrawals do not count toward your provisional income. The proportion of SSI recipients aged 65 or older declined from 61% in January 1974 to 30% in December 2021. The overall long-term growth of the SSI program occurred because of an increase in the number of disabled recipients, most of whom are under age 65. Although men historically were more likely than women to be insured, the gender gap is shrinking.


Some people are investing in their retirement without even realizing it. How much of your preretirement income Social Security is designed to replace. There is a maximum amount of compensation subject to the OASDI tax, but no maximum for HI.

Look for More IRS Form Revisions Now that the Inflation Reduction Act is Law

The annual number of awards to retired workers rose from 1.6 million in 1981 to 3.2 million in 2021, while for disabled workers it increased from 352,000 in 1981 to 540,000 in 2021. The annualized rate of increase over the period from 1980 to 2020 is 1.9% for retired workers and 1.1% for disabled workers. The annual number of awards to retired workers rose from 1.6 million in 1980 to 3.4 million in 2020, while for disabled workers it increased from 397,000 in 1980 to 620,000 in 2020.

What Is the Average Social Security Payout?

Eligibility requirements and federal payment standards are nationally uniform. SSI replaced the former federal/state adult assistance programs in the 50 states and the District of Columbia. The proportion of women among retired-worker beneficiaries quadrupled between 1940 and 2020. The percentage climbed from 12% in 1940 to 47% in 1980, 48% in 1990, and 51% in 2020. The proportion of women among disabled-worker beneficiaries more than doubled between 1957, when DI benefits first became payable, and 2020. The percentage rose steadily from 19% in 1957 to 35% in 1990 and 50% in 2020.

The Trustees estimate that the combined OASI and DI trust fund reserves will be depleted by 2034. At that point, payroll taxes and other income will flow into the fund but will be sufficient to pay only about 78% of program costs. As reported in the 2021 Trustees Report, the projected shortfall over the next 75 years is 3.54% of taxable payroll. Benefits were awarded to about 5.8 million persons; of those, 58% were retired workers and 11% were disabled workers.

Here’s how Social Security calculates maximum benefits and what you can do to get the biggest possible payout. Additional Medicare Tax applies to an individual’s Medicare wages that exceed a threshold amount based on the taxpayer’s filing status. Employers are responsible for withholding the 0.9% Additional Medicare Tax on an individual’s wages paid in excess of $200,000 in a calendar year, without regard to filing status.

“[The] announcement of a 1.3 percent COLA increase—while modest—is needed to help Social Security beneficiaries and their families try to keep up with rising costs,” said AARP Chief Executive Officer Jo Ann Jenkins. “The guaranteed benefits provided by Social Security and the COLA increase are more crucial than ever as millions of Americans continue to face the one-two punch of the coronavirus’s health and economic consequences.” Overall, 52% of the approximately 7.7 million SSI recipients were women, but that percentage varied greatly by age group. Women accounted for 65% of the 2.3 million recipients aged 65 or older, 50% of the more than 4.4 million recipients aged 18–64, and 32% of the 1.0 million recipients under age 18.