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- What if I Don't Have Enough Credits for Social Security Benefits When I Retire?
The Social Security system provides retirement benefits for those who have paid into the system through payroll taxes. The amount of the benefit depends on your lifetime earnings record. Social Security applies a mathematical formula to arrive at your monthly benefit, which remains the same -- with annual cost-of-living adjustments -- until you die. The time at which you begin taking benefits can affect the benefit amount, but there is no minimum benefit.
Early and Late Retirement
You can begin drawing retirement as early as age 62, but you won't receive a full benefit unless you wait until at least your full retirement age. This varies from 65 to 67 years depending on the year of your birth. If you apply for benefits early, Social Security reduces what would be your full benefit by 5/9 of 1 percent for each month remaining until you reach full retirement, age, up to a maximum of 36 months, and then 5/12 of 1 percent for any additional months remaining. The maximum reduction for early retirement works out to about 30 percent of your full benefit.
Social Security does not set a minimum retirement benefit, whether or not you continue working after you retire and apply for benefits. To qualify for Social Security retirement, you must work and earn at least 40 work credits, by paying in to the Social Security system through payroll taxes. You can earn a maximum of 4 credits every year. If you don't have the work credits, then you can't draw any retirement. If you have the work credits and have only earned a very small amount of money over your lifetime, you may draw only $50 or $100 a month on that work record.
There is a maximum benefit amount set in 2012 at $2,513 for a worker retiring at age 66. No matter how much that worker has earned over his lifetime, his benefit can only grow higher through the cost-of-living adjustments. To earn the maximum benefit, you must have made at least the maximum taxable amount of wages every year of your working life since the age of 21. In 2012, that amount was set at $110,100. If you earn any wages over and above that amount, you did not pay Social Security taxes on the earnings.
Making an Adjustment
If you're curious about your entitlement to retirement benefits, you can request a Benefit Statement by going online at ssa.gov or calling the agency as 800-772-1213. The Benefit Statement will give you a breakdown of your annual earnings and the benefit to which these earnings will ultimately entitle you. If you find you are entitled to only a small retirement benefit, there are some options available. One would be to return to work and earn more money -- by increasing the amount of payroll tax you pay, you bump up your retirement benefit. You can also delay retirement up to the age of 70 and thus raise your benefit, or apply for spouse benefits on the earnings records of your spouse or ex-spouse. Even if a spouse has not worked at all, she may be entitled to up to half the full benefit of the working spouse. .
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