In the Social Security system, work credits are units of measurement used to determine whether an individual is eligible to receive their benefits, based on their income and contributions to the system. A legal worker gets these credits by paying taxes on his salary. A maximum of four credits can be earned each year, and the amount of money earned in wages to earn one credit changes every year. And this is what we wanted to tell you: there were changes in this number.
To qualify for Social Security benefits, at least 40 work credits must be accumulated. Once these credits have been accumulated, the individual is eligible to receive Social Security benefits. The requirement in question was established in 1978 as part of the amendment to the Social Security Act. This modified several aspects, including the eligibility requirements for all benefits, such as retirement, disability, and survivor security.
Earning Social Security Work Credits Is Harder This Year
The limits to obtain labor credits rise every year, as long as inflation rises, that is, the cost of living increases. This aims to ensure that Social Security benefits and requirements remain aligned with rising prices and the overall cost of living in the United States.
In fiscal year 2024, each work credit equates to $1,730 in earnings, up from $1,640 in 2023. If you work full-time, you will probably easily reach the four credits needed for Social Security, and this will not be a problem for you. But if you work part-time, you’ll need to keep an eye on the amount of your earnings to make sure you get all four credits.
Now, what happens if you don’t get all four Social Security work credits each year? Well, you may not qualify to receive certain benefits from the program, as these credits are a mandatory requirement for retirement, disability insurance, and other benefits.
For example, for retirement, 40 work credits are usually required, which is equivalent to 10 years of work. If you fail to accumulate enough credits in a year, it could affect your eligibility for retirement payments in the future. In addition, for disability insurance, a specific number of credits are required depending on the age at which you become disabled.
Social Security Benefits Just Increased in 2024
The Social Security system moves its payments up following the Cost of Living Adjustment (COLA), a parameter that helps to ensure that older people can preserve their purchasing power and not lose out to inflation. During the fiscal year 2024, the SSA increased its payments and benefits by 3.2%, and everything indicates that in 2025 the increase will be much lower: some projections indicate that inflation would be around 2.6%, but the COLA will be around 1.75%.
Therefore, if you have some money left over during any of these months, you should consider making an extraordinary savings to have more peace of mind next year. In some countries, inflation will be negative, as is the case of China, which will see an inflation of -0.3%, while other countries will be very close to zero, such is the case of Switzerland, whose inflation in 2025 will be 1.7%, or Portugal, where it will be around 1.4%.