Social Security work credits: Once you get 40 of them, does it make a difference?

So I am on pace to get to 40 Social Security credits by age 33 or 34, assuming I continue to stay and work in the United States. For benefits/retirement/disability purposes, does it make any difference if I continue to accumulate work credits beyond that threshold, or is it that once I’ve hit 40 credits, it makes no difference, retirement-wise, if I stay at 40 credits forever or get to 50, 60 or 70 credits?

Also, does being a dual citizen have any effect (a Dutch-American, for instance, could collect Dutch retirement benefits and American Social Security simultaneously?)

Essentially, no. You need 40 for retirement benefits, and can get disability benefits with fewer credits, depending on your age, but 40 is always sufficient.


Of course, the AMOUNT of retirement benefit increases as you keep working, but the “credits” are just a mechanism for eligibility.

OK, thanks, but that’s what I meant - whether you get more in retirement benefit by working longer or if once if you’ve hit 40 credits it makes no further difference.

It depends upon whether or not you are going to be making more working or not. The 40 credits don’t matter once you get them. The benefit that you get is based on the average amount you have earned over the 35 years in which you earned the most. So, if you stop working or work out of the country, you are putting a zero into that slot and your Social Security goes down. On the other hand, if you already have 35 years of wages, then whether it makes sense to keep working depends on whether you’re replacing lower earning years with higher earning years.

To be honest, if you’re relatively young, then I don’t think you should overthink Social Security because it’s nearly guaranteed to be different by the time you get there.

It doesn’t matter if you get more than 40. 40 is the minimum requirement. That’s 10 years of maximum credits because you can’t earn more than 4 in a year. Earning the 40 credits early in life is beneficial if you become disabled.

That’s why I added the extra comment.

I understand the question, and SS and I’m still confused by this thread.

Your direct question has been answered. Once you get 40 you’re good to go.

The amount you can get will changed based on working more than that 10 years of course. SS uses “average indexed monthly earning” or AIME to determine your benefit, and that is based over the last 35 years or your earnings. So more earnings equals more benefits.

I’ll add that this is a very progressive benefit. And I (somewhat) cringe when I read that a great way to make more in SS is to work longer. While that is true, the benefit to that isn’t as large as one might think. I ran some number for a friend who was considering working for another year, thereby trading in the $4,500 he made in 1984 for the ~$130,000 he’ll make in 2019 (capped). That shift will net him an extra ~$600 a year. You’ll pick that up off the floor, but nothing to write home about.

And yes you can get benefits both from SS and from another country. I earned 34 SS credits before I moved to Canada and have full Canadian (actually Quebec) pension as well as Old Age Security (just a payment from the government not based on work). In addition, owing to a special treaty with the US, I get about $2700 a year based on my 34 quarters. And my wife gets 50% of that (she had only 6 quarters a result of being an uncovered school teacher).

I think you may be confusing medicare with social security.

Medicare requires 40 credits (working for 40 separate 3 month quarters, so 10 years) to get full medicare part A coverage. If you have 40+ quarters, you don’t pay premiums for part A. If you have less, you have to pay a premium (or you can go back to work to get to 40 quarters).

With medicare, no, there is no benefit from paying taxes for more than 10 years.

Social security uses a different calculation. Social security takes your highest annual earnings from 35 separate years, adds them together, and then divides them by 420 to determine your ‘average indexed monthly earnings’. Your AIME is then used to determine your SS benefit based on how much income you have using the 90-32-15 calculation. If you’ve worked less than 35 years (lets say you’ve only worked for 22 years) they take the remaining 13 years and put a 0 for them, then add them into the total average to get your AIME.

FWIW, IMO, once you have 40 credits for medicare and once you have hit the cap for the 32% return on social security (about $5400 a month, which adjusts for inflation) then you aren’t going to benefit from more income IMO. A 15% return on social security is pretty abysmal. Every $1000 you earn per month in your AIME between $5400-$11000 only gets you an extra $150/month in SS benefits. Meanwhile the first $900 you earn in your AIME results in a SS benefit of $810.

TL;DR - with medicare, after you work and pay taxes for 10 years there is no increased benefit to you yourself (although those extra taxes help fund the system). With social security, there is added benefit of working for up to 35 years. After you’ve worked for 35 years, there is no additional benefit to your AIME (unless those new years are much higher earning than some of your earlier years).

The amount of benefit paid increases until someone has 35 years of paying the annual maximum into Soc Sec. To find the details, the key terms to search for are “Social Security AIME PIA”.

AIME is average indexed monthly earnings, which a sort of inflation adjusted average amount of monthly income you paid Soc Sec tax on for the highest earning 35 years of work. The first $895 of AIME gives 90% toward your future Soc Sec benefit, but more that you get 32% or less. I suppose you might want to make sure to get your AIME to at least $895 if you are looking for a cut off point of maximum return on what you pay into the system. But that would give a monthly retirement benefit of $805 compared the maximum possible of $2788. Those numbers are rough estimates based on 2018, and change year to year due to inflation.

True, but I think an annuity you buy for $100,000 will provide about $500/month in benefits for the duration of your retirement.

By comparison if you are using the 15% ROI from social security for income above $5400/month, you need to earn $1,386,000 in income over 35 years over the 5400/month AIME cutoff to get a $500/month increase in your SS benefits. About 14x more money.

If your goal is to max out your SS, then you are better off just buying an annuity after a while rather than trying to pay more in SS taxes to get more benefits back.

The $4500 he made in 1984 is indexed for inflation, I believe.

It is. It clocks in at $14,700 now, but it still pales in comparison to the ~$134,000 in 2019 that he’d trade that in for.

I was surprised the first time I did that type of calculation. I thought there would be more of a bump.

So, if you earn your 40 credits and then stop working, you will lose your eligibility for disability benefits in 10 years. You have to keep earning credits in order to qualify for disability.

This thread has hints to the answer of a question I have had for some time now. I started hitting the annual Social Security maximum contribution in 1991. By 2025 I will have 35 years of maximum contributions (assuming no drastic change in my career). I will also turn 65.

Assuming the rules stay the same, strictly from the standpoint of Social Security retirement benefits, what I earn from 2026 on would have no effect on my monthly benefit. I could stop working (or go part time) but wait X years before drawing Social Security and the benefit would be no different than if I had worked full-time for those X years.

Am I interpreting the rules correctly?

From what I’ve read the benefit of working another year is not the trivial increase in benefits, it is delaying getting benefits another year, which increases them (unless you’ve turned 70) and mostly not taking money out of your retirement savings for another year.

Ah…? Hmm…

I had thought of hitting 40 credits in America and then spending the rest of my life working abroad in a foreign country and then retiring in that foreign country while still collecting US Social Security but I guess that plan may not work then - and yes since it’s drawn on the 35-year average my Social Security checks would be extremely low. Guess they don’t want people gaming the system.

That’s just for disability benefits. You can quit after 40 credits and still collect your retirement pension at age 62 or later.

How are you supposed to keep working and earning money if you are disabled?

If you become disabled, and are approved for Social Security Disability, the clock stops while you are in the SSD system. You don’t need to keep earning credits during that period. SSD will pay you your social security benefits, and you are eligible for medicare after 2 years.