How Are Credits Generated for Social Security?

First, the credits are based on your total earned income per year. Both earnings generated as salary in the case of employees or generated as a self-employed worker are considered income. In the case of self-employment, the Agency may require additional information to verify this income.

Second, the maximum number of credits that the individual can earn is 4 credits per year. This does not mean that you have to work all year round. The amount of credits is determined based on the total income reported to the Social Security system. The calculation per credit typically varies by year. For example, by 2023, the individual earns one (1) credit for every $1,640 of income. This means that, to earn the 4 credits for this year, the person must earn at least $6,560 in income (that is, 4 times $1,640). For the year 2022, this amount was $1,515 per credit. By 1978 it was only $250 per credit! Remember that this amount varies per year, so for 2024 it will be a different amount.

Paying taxes above this maximum (which varies per year) does not increase the credits per year since, as we mentioned, the maximum annual credits are 4. However, if you file taxes above this maximum, it could affect the amount of disability benefits calculated, depending on an average of earnings over the years worked. In other words, the number of credits does NOT determine the amount of benefits, only your eligibility.

Retirement credits

Third, as a basic rule, 40 credits are needed for retirement benefits and 20 credits for disability benefits. It does not matter when the 40 credits are earned or accrued toward the retirement benefit. The important thing here is to reach 40 credits.

Disability credits

This is not true for disability benefits. For these benefits it is very important when the credits are earned. You need 20 credits, but these 20 credits must have been earned in the last 10 years. This difference is fundamental and therefore it is very important to consult with us to optimize your application for benefits.

Do not hesitate to contact us for no-obligation advice on your Social Security disability benefits. We are here to help you.