American workers often look forward to the benefits they will receive from Social Security at the end of a long career. Social Security benefits can be taken starting from the age of 62. According to the Social Security Administration, you continue to receive more benefits every year you delay the age at which you take the benefits, up to 70 years of age. Meanwhile, these benefits will only be available if you have earned enough credits.
Regardless, you should know ahead of time what may put you off from qualifying for the benefits. This is because many workers may not have earned Social Security benefits in some rare cases. This article lists six reasons why this could be the case.
There aren’t Enough Social Security Credits
The American Association of Retired People (AARP) reports that, in order to qualify for Social Security benefits, workers have to earn a certain number of “credits” while working.
Earning $1,470 in wages or as self-employment income in 2021 provides you with one credit. According to the Social Security Administration, you can earn a maximum of four credits in one year. To qualify for any kind of Social Security benefit, a person must have 40 credits. As such, you may not be able to take advantage of this benefit if you haven’t worked enough to earn all 40 credits.
You’re a Government Employee
In general, the government provides for its employees, but there may be some state, county, and municipal exemptions for employees who do not receive Social Security benefits. Instead, the employees make payments to and receive pension benefits from the state. They include the following:
- U.S. government employees hired before 1984 — will receive a pension under the old Civil Service Retirement System
- Railroad employees — have a pension system dating back to the 1930s
- Foreigners who work for their home nations in the U.S., e.g. ambassadors, or workers for international organizations.
- Police and firefighters who are first responders or security personnel.
- Several K-12 teachers.
Self-Employment Tax Not Paid
Those who are self-employed may not know that they must pay Social Security twice. This payment must be done for themselves and their business. As necessary, you must pay self-employment tax together with your federal tax return. However, note that you may not have enough Social Security credits when you retire if you do not file a tax return or if you do it incorrectly.
People who have been Divorced
Those who are divorced and have not earned enough credits to qualify for Social Security, and expect to receive half of their ex-spouse’s benefits, should proceed with caution. For such an individual, the crucial criteria are that you must be single, older than 62, and must have made less money, and received fewer benefits than your ex-spouse.
Furthermore, you cannot claim a spouse’s benefits if you have been married for less than 10 years, according to Investopedia.
Retiring in a Foreign Country
Retirement outside the United States, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, the Northern Mariana Islands, or American Samoa, will not make you eligible for Social Security benefits, according to Investopedia reports.
Benefit payouts from the United States will not go to Azerbaijan, Belarus, Cuba, Kazakhstan, Kyrgyzstan, Moldova, North Korea, Tajikistan, Turkmenistan, or Uzbekistan. Exceptions may apply, though. You must consult the Social Security Administration’s “Payments Abroad Screening Tool” in order to determine whether you are eligible to receive benefits while living abroad.
Inclusion of Several Immigrants
Individuals who have come to the United States in their later years and were unable to earn the 40 credits needed to receive Social Security benefits cannot receive them.
But there is a solution to this problem, and it involves earning six work credits in the United States, which will qualify the individual for prorated benefits in the United States. This benefit can be added to prorated benefits from their previous country, referred to as a “totalization agreement.”