Social Security

What happens if you don't work 35 years for Social Security?

The amount you can receive as a retiree is contingent on two things: the age you retire at as well as your average wage over a 35-year period.

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What happens if you don't work 35 years for Social Security?
Kevin Dietsch AFP

To be able to claim retirement benefits in the US, it is first necessary to earn 40 'credits', which can be earned during a year of work. The maximum that can be earned in a year in four but even if you reach 40 fast it is usually a bad idea to retire immediately.

This is because there are multiple factors which affect how much you can claim in retirement Social Security payments. These are how much you have earned while earning these credits, your highest salary each year for 35 years, and the age at which you retire at.

Retiring too early could preclude you from earning more money in retirement, so it is usually best to hold off retirement as long as possible, at least until the full retirement age of 66-years old.

What difference is there with not working the full 35 years entail?

Your final Social Security payment is calculated with the 35 years of work history in which you earned money. This does not need to be consecutive, so if you took a two-year break from work and then earned more money on your return, the following years would displace the years you earned the least.

This is true but in the opposite sense for years you may not have worked. For example, if you didn't work for five years in a 35-year period, then five years of your salary would be $0. The higher your wage over the 35-years that you submit, then the higher your monthly Social Security payments will be.

In practice this means that your benefit will be much lower than someone who worked the full 35 years, meaning it is usually necessary to work the full 35 years if you have little to no private savings and are wholly relying on state aid.

How does the age of retirement affect your payment?

The maximum benefit amount depends on the year one retires. Those who chose to retire before 65 are penalized with lower benefits. These are the splits for 2021, depending on age of retirement:

  • $3,895 for someone who files at age 70,
  • $3,148 for someone who files at full retirement age (currently 66 and 2 months),
  • $2,324 for someone who files at 62.

You can check your own estimated monthly benefits using the Social Security Administration online calculator tool. You will need to know your annual income for the past 35 years or use an estimate.