This is part two of our article, “How Does Social Security Protect Women and Families?“
When you work at a job where you pay Social Security or self-employment taxes, you earn credits that enable you to qualify for Social Security benefits. You may earn up to four credits per year depending on your earnings.
In 2017, you earn one credit for every $1,300 in wages or income from self-employment. The number of credits you need to qualify depends on both your age and the type of benefits you are seeking. No matter what your career, it’s important to understand the rules and how your time spent in the workforce will impact your Social Security benefits.
- For retirement benefits, you generally need at least 40 credits, or 10 years, of work. If you have not worked for long enough to qualify on your own you may qualify for benefits through your spouse’s work record.
- For disability benefits, if you are 31 years or older, you must have earned at least 20 credits during the 10 years just before you became disabled. Different rules apply if you are younger than 31.
- For survivor’s benefits for your family members you need 40 credits, or 10 years, of work history. However, under a different rule, benefits can be paid to your children and to your spouse (who cares for them) if you have worked for a year and a half in the three years prior to your death.
As a woman, it is important to pay close attention to the benefits you will be receiving from Social Security, considering that you may have to live on your retirement benefits for a long period of time. In terms of receiving benefits, you can either start early and receive a smaller payment over a longer period of time, or you can wait until full retirement age and receive larger benefits over a shorter period of time. Before making a decision about how you want to receive your benefits you’ll want to review several factors, like other sources of retirement income, marital status, whether you plan to continue working, your life expectancy, and your taxes. Here are a few things to keep in mind:
- If there’s a large gap between what you expect to collect from social security and your projected expenses, waiting a few years to retire and collecting larger benefits might help to improve your finances.
- The longer you stay in the workforce, the more money you will earn and have available to put into your overall retirement savings.
- Cost-of-living calculations are made based on your initial year’s benefits; the higher the base benefits, the greater the annual increase. This can help you maintain your standard of living through many years of your retirement.
Source: Adapted from an article by Broadridge Investor Communication Services, Inc.