What Determines Social Security Benefits Eligibility

by Kevin Mercadante

People often skip over planning for Social Security benefits eligibility while they are working. That’s because we’re all busy investing for retirement and it’s easy to forget one of the most important elements of retirement planning.

Social Security has for decades been one of the primary sources of retirement income for tens of millions of people, so having an understanding of how it works is just as important as any other retirement provisions.

Besides asking what the maximum Social Security benefit is, people want to know how to qualify for Social Security. Most people will (though certainly not everyone), but there are certain criteria that must be met in order to do so.


The minimum age to collect Social Security retirement benefits is 62, which is considered early retirement and will come with reduced benefits. “Normal retirement age” depends upon when you were born.

According to the Social Security Administration, normal retirement age depends on the year of your birth. For those born between 1943 and 1954, it is age 66. For those born between 1955 and 1960, two months are added for each year that passed between 1954 and the year of their birth (so if you were born in 1955, normal retirement age is 66 and two months). Normal retirement age tops out at 67 for anyone born 1960 or later.

You can actually increase your monthly benefit by delaying collection until age 70, but there is no benefit for delaying beyond this age.


U.S. citizenship is not required to qualify for Social Security retirement benefits. Resident aliens are also eligible if their alien status is properly documented, they pay into the system, they meet the “credits” criteria (below) and they meet other specifications as required.


Social Security determines income qualification based on “credits.” Credits are based on earned income (wages and income from self-employment). Pensions, interest and dividend income and investment earnings don’t qualify since they are not “earned.”

You need to have a minimum of 40 credits, with each credit being a minimum of $1,120 of earned income. You can earn up to four credits for each year that you make contributions on eligible income of at least $4,480 ($1,120 x 4 calendar quarters). Translated, you need to earn at least $4,480 per year for 10 years in order to be eligible to collect retirement benefits. (For 2012, you will need to earn $1,130 in covered earnings to get one Social Security or Medicare work credit, and $4,520 to get the maximum four credits for the year.

If it sounds a bit complicated, it’s because credits used to be based on quarters, not full years, so you would have had to earn at least $1,120 (or the then minimum) per quarter in order to make your 40 credits. This would be a nightmare for seasonal workers and those subject to frequent layoffs, but fortunately that calculation is all gone now.

What You’ll Need to Provide the Social Security Administration

OK, let’s say you qualify for benefits based on all of the above—what do you need to have in order to apply? Per the Social Security Administration:

  • Your Social Security number
  • Your birth certificate
  • Your W-2 forms or self-employment tax return for the last year
  • Your military discharge papers if you had military service
  • Your spouse’s birth certificate and Social Security number if he or she is applying as well
  • Your children’s birth certificates and Social Security numbers if you are applying for children’s benefits
  • Proof of U.S. citizenship or lawful alien status if you (or a spouse or child applying for benefits) were not born in the United States, and
  • The name of your financial institution, the routing number and your account number, so your benefits can be direct-deposited into your account. (Social Security provides alternate direct deposit methods in the event you don’t have a financial institution.)

It’s important to remember that Social Security benefits will not provide you with a comfortable retirement, but rather something closer to a minimum survival level income. For this reason, it’s important that you have other retirement income, especially retirement investment assets to provide for what Social Security won’t.



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{ 3 comments… read them below or add one }

Kevin M November 9, 2011 at 7:10 PM

Yes, I think they stopped doing that last year, and I don’t recall if it will be issued every so many years, or canceled entirely to save money.

You can still go to the website and get an estimate.


Neal Frankle November 9, 2011 at 10:49 PM

Right. I actually have an electronic reminder to tell me to go the site and get the statement each year. That way I can make sure SSI doesn’t make any errors.


krantcents November 9, 2011 at 5:21 PM

Not that long ago, Social Security would send out your benefit package to let you know what you earned. I will be taking Social Security at 70 years old.


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