What are work credits?

When you apply for Social Security benefits, the Social Security Administration basis part of its decision on how many work credits you have. Work credits, according to the SSA, are something you earn based on the number of hours you work. While the conversion of how much you earn to the number of credits changes, currently, you earn one credit for every $1,360 you earn. You can earn up to four credits per year.

When figuring Social Security benefits, the number of credits you have can determine if you qualify for the benefits. How many credits you need depends on the type of benefit you apply for. Most commonly, work credits come into play when talking about disability benefits and retirement benefits.

Retirement benefits are the easiest. As long as you were born after 1929, the number of credits you have to have is set at 40. If you have 40 credits and meet the other requirements, you can get Social Security retirement benefits.

Disability benefits are a bit more difficult. Your age when you apply for benefits is important because it determines how many credits you must have. If you are 31 or older, then you need to have earned at least 20 credits in the previous 10 years. Do note that as you age beyond 31, the number of credits needed increase by half a credit each year. If you are under the age of 24, then you need to have earned six credits in the last three years.

It is more complicated if you are between the ages of 24 and 30. To determine the number of credits, you must calculate the number of years between your current age and the age of 21. Then, multiply that number by four, which is the maximum credits you may earn in a year. Finally, divide that number in half. So, for example, if you are 28, then you are seven years from the age of 21. Seven times four gives you 28, divided in half equal 14 work credits. This information is for education and is not legal advice.

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