As many Generation X and Millennial workers age, they begin to wonder if they’ve earned enough Social Security credits to secure their retirement benefits.
To qualify for these benefits at age 62, individuals generally need at least 40 Social Security credits, which equates to about 10 years of work. Let’s see how this requirement applies to Gen X and Millennials.
Generational Eligibility
Generation X includes those born between 1966 and 1980, while Millennials are those born between 1981 and 1995. By 2024, even the youngest Millennials will have had more than a decade of work experience, assuming they have been employed in jobs covered by Social Security taxes.
Earning Credits
Workers can earn up to four credits per year by working in a job covered by Social Security. In 2024, one credit is earned for every $1,640 in wages, meaning four credits can be earned with $6,560 in earnings.
Therefore, both Gen X and Millennials who have worked consistently and paid Social Security taxes likely have earned the required 40 credits.
Maximizing Social Security Benefits
Ensure Coverage by Social Security
It’s crucial to ensure your work history includes jobs covered by Social Security. Most jobs are, but some, like certain government or nonprofit positions, might not be. Make sure your earnings are properly reported for accurate benefit calculations.
Delay Retirement
While you can start claiming benefits at age 62, delaying retirement can significantly increase your monthly benefit. Waiting until your full retirement age (between 66 and 67 for Gen X and Millennials) or even until age 70 can boost your payments because of delayed retirement credits. This strategy can help counteract inflation’s effects on your purchasing power.
Work for 35 Years
Social Security calculates your benefits based on your highest 35 years of earnings. If you have less than 35 years of work, zeros are factored into the calculation, reducing your average earnings and, consequently, your benefits. To maximize your benefit, aim to work for at least 35 years, ensuring that low-earning years are replaced with higher-earning ones.
Maximize Earnings
Your earnings play a crucial role in determining your Social Security benefits. The more you earn (up to the taxable maximum, which is $160,200 in 2024), the higher your benefits. Therefore, seeking higher-paying jobs, negotiating salaries, and taking on roles that enhance your career trajectory can be advantageous.
Example: Maximizing Benefits
Consider this example: A worker who consistently earns at or above the contribution and benefit base (the maximum amount of earnings subject to Social Security tax) for 35 years can receive a maximum monthly benefit of $4,873 if they delay filing until age 70.
This is a significant increase compared to filing earlier, where benefits are reduced due to early retirement.
Additional Support Programs
For those who might not meet these criteria, alternative support like Supplemental Security Income (SSI) and programs like SNAP (Supplemental Nutrition Assistance Program) may be available.
These programs provide additional financial assistance to low-income individuals and families, ensuring that basic needs are met.
Most Gen X and Millennials who have been in the workforce for a decade or more likely have the credits needed to qualify for Social Security retirement benefits.
However, maximizing those benefits requires strategic planning, including ensuring consistent work, delaying retirement, and maximizing earnings. Staying informed and proactive in these areas can significantly impact your financial stability in retirement.
1. What are Social Security credits?
Social Security credits are units earned through work in jobs covered by Social Security. You need at least 40 credits to qualify for retirement benefits.
2. How can I maximize my Social Security benefits?
You can maximize benefits by delaying retirement, working for at least 35 years, ensuring your job is covered by Social Security, and maximizing your earnings.
3. Can I start receiving benefits before age 62?
No, you cannot start receiving Social Security retirement benefits before age 62.
4. What happens if I don’t have 35 years of work?
If you don’t have 35 years of work, zeros are factored into your benefit calculation, which can lower your monthly benefit.
5. Are there other programs if I don’t qualify for Social Security?
Yes, other programs like Supplemental Security Income (SSI) and SNAP (Supplemental Nutrition Assistance Program) can provide financial assistance.
