FOR LAWYERS

Social Security Credits

By
Josef Rappaport
/
December 19, 2022

Social security credits are a unit of measure used to determine an individual's eligibility for social security benefits, including retirement, survivor, and disability benefits. In the context of disability benefits, an individual must have a certain number of social security credits to qualify for payments.

Key Takeaways

  • Social security credits are a unit of measure used to determine eligibility for social security benefits, including disability benefits.
  • An individual must work and pay social security taxes to earn credits. The number of credits needed to qualify for disability benefits depends on the individual's age at the time of disability.
  • In addition to the credit requirements, an individual must also meet the Social Security Administration's definition of disability to qualify for benefits.
  • Disability benefits are calculated based on the individual's average monthly earnings and are adjusted annually for cost of living adjustments.

Earning Social Security Credits

To earn social security credits, an individual must work and pay social security taxes. The amount of credits an individual can earn in a year depends on the amount of income earned. For example, in 2021, an individual earns one credit for every $1,470 of earnings. This amount is adjusted annually based on the average monthly earnings and the cost of living.

An individual can earn a maximum of four credits per year, regardless of the amount of income earned. This means that an individual must work and pay social security taxes for at least 10 years to be eligible for disability benefits. However, the number of credits needed to qualify for disability benefits depends on the individual's age at the time of disability.

Qualifying for Disability Benefits

To qualify for disability benefits, an individual must have a certain number of credits based on their age at the time of disability. The number of credits required is as follows:

  • Under 24 years old: 6 credits earned in the 3-year period ending when the disability begins
  • 24 to 31 years old: Credits for half the time between 21 and the time disability begins
  • 31 or older: 20 credits in the 10 years immediately before disability begins

In addition to the credit requirements, an individual must also meet the Social Security Administration's definition of disability. This means that the individual must have a physical or mental condition that is expected to last at least one year or result in death, and that prevents the individual from engaging in any substantial gainful activity.

Calculating Disability Benefits

Once an individual meets the credit and disability requirements, their disability benefit amount is calculated based on their average monthly earnings. The benefit amount is determined by a formula that takes into account the individual's lifetime earnings, with higher earners receiving a higher benefit amount.

The benefit amount is also adjusted annually for cost of living adjustments, which are increases in the benefit amount to account for inflation.

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