Phillips & Ingrum

Earning Credits for Social Security Benefits

By Grayson Cannon

IMG_0200When a person works in any covered employment (typically any job in the United States that is not otherwise covered by a government pension such as the military or employment by the U. S. Government or certain state and local governments), money is withheld from their earnings for Social Security taxes. These withholdings earn a person credits in the Social Security system toward both retirement and disability, as well as other family benefits available under the Social Security system.

Social Security assigns these credits in terms of quarters of coverage, which generally refers to having earned enough in a given quarter of the year to obtain a credit toward disability and/or retirement benefits.  In order to be eligible for any kind of disability benefits, the worker must have earned credits in at least twenty of the last forty quarters preceding the onset of disability.  If the worker does not have credits for this many quarters in the required time frame before he or she becomes disabled, they are not “insured” for disability and cannot receive disability benefits under the Social Security Disability Insurance system.  The required number of quarters is less for workers applying for disability who are between the ages of 18 and 30, and can be more for older workers, but there still must be enough work credits earned before an applicant can even be eligible for disability benefits.

Because of the requirement that a worker be insured or covered to receive benefits, and that those credits have been earned within a certain time frame of the beginning of disability, this means that a worker who has achieved enough credits to be fully insured, will only stay covered for disability for at most, a window of five years after the applicant stops working and paying into the system.

In 2016 a worker must have $1260 of earnings to be credited with a quarter of coverage. This amount is adjusted annually for cost of living increases, so the amount of earnings required was smaller in prior calendar years.  The way Social Security calculates credits is  helpful in that, while you cannot be given credit for more than four quarters in a calendar year, SSA will give credit for four quarters even if all the earnings were actually posted in a single quarter.  So, for example, in 2016 a worker will need 4 x $1260 to earn a full year’s worth of credits or  $5040.  Even if the worker earns that $5040 all during the second quarter, for example, they will still get 4 credits for 2016, despite the fact that the actual earnings were all in a single quarter.  Self-employed persons need the same amount of earnings to earn a quarter of coverage.

This is just one reason why everyone who is employed or self-employed should regularly review their Social Security earnings record to make sure they are receiving credit for their work.  Although Social Security no longer automatically sends out Earnings and Benefit Statements, one can be easily requested by logging into and making a request.  More specific information about the amount of earnings needed for coverage can be found at, at the Frequently Asked Questions tab.