There is a small, and dwindling, number of people who qualify under Social Security’s Special Minimum Benefit program. According to the Social Security Administration (SSA), the number of Americans who received the benefit in the early 1990s was about 200,000 in the early 1990s. In 2010, the number had dropped to 75,000. By 2015, there were just 48,000 people receiving the benefit. At the end of 2018, the SSA noted that it does not expect any new recipients of this benefit.
The reason for the cessation of the Special Minimum Benefit is that the regular Social Security benefit for taxpayers has gradually risen to the point that it now exceeds this minimum benefit.
Special Minimum Benefit
Those who worked at very low-wage jobs all of their lives were the recipients of the Special Minimum Benefit, which capped at $848.80 per month, or $10,185.60 annually, in 2018 for someone who worked 30 years. The Special Minimum Benefit was tied to price-indexed inflation; regular Social Security benefits are calculated based on wage-indexed inflation.
Qualifying for Social Security
For 2019, you receive one credit for every $1,360 in taxable Social Security earnings, up to a maximum of four credits annually. If you’re just starting your career, you’ll need to earn a minimum of $5,440 annually for at least 10 years to receive the required 40 credits necessary to qualify for Social Security.
How Social Security Is Calculated
After eligibility determination, Social Security calculates your monthly average earnings via the 35 years in which your taxable wages were highest, although these amounts are adjusted for inflation. If you did not work for a total of 35 years, Social Security enters “zero” for the years you did not receive wages. For example, if you worked for 30 years, Social Security would enter zero for five years when making calculations.
Calculating Spousal Benefits
If a spouse never worked, or did not earn the 40 base retirement credits, he or she may qualify for Social Security spousal benefits based on their husband or wife’s earnings record. This is not a death benefit, but one the non-qualifying spouse can take while the retired spouse is still alive.
The base spousal benefit is half of the working spouse’s Social Security amount. Much depends on when the spouse decides to start taking benefits.
Should the spouse decide to take benefits as early as possible, at age 62, that may reduce his or her benefit to less than one-third of the working spouse’s Social Security amount. That’s because spousal benefits are reduced 8.33 percent each year for every year prior to normal retirement age, for a period of up to three years. Should the number of years go beyond three, there is a further benefit reduction of 5 percent per year until reaching full retirement age.
Making the Most of Benefits
Make the most of your Social Security benefits by waiting as long as possible to claim them. People taking benefits before their full retirement age receive a lesser amount than they would have had they waited until qualifying for full retirement.
By taking benefits at 62 when you do not reach full retirement age until 67, you will find your monthly benefit reduced by a half percent every month until your full retirement age. For example, if you were eligible to receive a full benefit of $1,000 per month at age 67, taking benefits at 62 would drop the amount to $750. That means you will end up with about 75 percent of what could have been your full monthly benefit had you waited.
Wait until age 70 to take benefits, and you will receive benefits 32 percent higher than had you taken them at full retirement age.
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