Changes ahead for Social Security Credit: here’s the new threshold set for 2025

To claim retirement benefits in the US, you need to earn 40 ‘credits,’ the equivalent of ten years of consecutive work. The maximum number of credits earned annually is four, one for each quarter. However, once you reach earnings that exceed the value of four credits combined, which in 2024 stood at $6,920 ($1,730 per credit), you will automatically receive four credits for that year.

Starting in 2025, the value of each credit will increase to $1,810 or $7,240 for all four. These amounts change annually based on the change in the national average wage index. The formula to calculate the increase looks like this:

This increase will impact low-income individuals and part-time workers, as it may prevent them from obtaining the full four credits in the coming year. According to the Bureau of Labor Statistics, the median weekly earnings for private sector workers in November were $1,221.42. This means that if they are contributing to Social Security, they earn enough for one credit after just two weeks of work.

For more information, the Social Security Administration has a pamphlet describing how credits are earned and how they are applied to each aspect of Social Security.

Why Social Security credits are so important

Multiple factors affect how much you can claim in retirement Social Security payments. These are your earnings, your highest salary each year for 35 years, and the age at which you retire.

These credits are also used to claim Social Security Disability Insurance (SSDI). Not having enough credits will prevent you from claiming disability benefits, contributing to more than 20% of disabled Americans living in poverty.

When a person who has worked and paid Social Security taxes dies, certain members of the family may be eligible for survivor benefits. Up to 10 years of work is required to qualify for benefits, depending on the person’s age at the time of death. Survivors of very young workers may be eligible if the deceased worker was employed for 1.5 years during the three years before his or her death.

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