Social Security Benefits Are Getting Harder to Earn. Here’s Why

Social Security Benefits Are Getting Harder To Earn. Here’s Why

One of the biggest myths surrounding Social Security is that everyone is entitled to a monthly benefit once they reach a certain age. In reality, Social Security benefits have to be earned.

Granted, there are ways to get around that, such as claiming a Social Security spousal benefit if you don’t qualify for a benefit of your own. But outside of spousal and survivors’ benefits, you can only collect Social Security if you earn enough money in your lifetime.

When you earn money, you pay taxes on that income to Social Security. That helps fund the program.

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Meanwhile, to collect Social Security, you need to earn enough money to accrue 40 work credits in your lifetime. Work credits are worth a certain amount of earnings, and that amount changes every year.

Next year, the value of a work credit is increasing quite a bit compared to 2022. And that could make it more difficult for part-time workers to snag those essential credits.

How work credits are changing

Recently, the Social Security Administration announced a number of key changes to the program that are set to take place in 2023. These include an 8.7% cost-of-living adjustment and a higher wage cap for Social Security tax purposes.

Meanwhile, the value of a single work credit is rising from $1,510 to $1,640 in 2023. And while you can only accrue up to four work credits in a single year, that increase to $1,640 may make it difficult for you to snag four credits if you work on a very part-time basis.

Or, to put it another way, if you want to accrue the maximum number of Social Security work credits possible in 2023, you’ll need your earnings to reach $6,560. Now, let’s say your total projected earnings for 2022 are $6,200. In that case, you should have no problem scoring your four work credits this year. But if you expect the same income for 2023, that won’t be enough to snag four credits.

An important update to keep in mind

If you work full-time, then an increase in work credit value shouldn’t impact you in 2023. Even if you’re only making minimum wage, if you put in 40 hours a week on the job and work most weeks during the year, you should manage to earn more than the $6,560 needed to snag your four work credits. Rather, it’s part-time workers who really need to be mindful of this change.

That said, do remember that it only takes 40 work credits all-in to be eligible for Social Security benefits in retirement. So if you’re in the midst of a career break and are therefore working on only a very part-time basis, you may have other opportunities to score those credits and set yourself up with income for your senior years.

And remember, spouses are eligible to collect Social Security based on their partner’s work records. If you don’t intend to ever marry, that’s obviously not an option to fall back on. But if you’re married and haven’t worked in years, you don’t necessarily have to stress about not being able to receive Social Security benefits when you’re older.

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