Retirement, the date marked in golden letters on the calendars of all people of working age, that day we all dream of after many years working and giving the best years of our lives to the system.
Now, everything is changing, as you can see if you look around, and of course, retirement in our country is also going to change, as the Social Security Administration (SSA), the agency in charge of issuing retirement benefit payments, has been clear: those who do not meet certain key requirements will not be able to access retirement benefits.
And of course, this has triggered all the alarms for those planning to retire soon. We’ll now tell you everything you need to know to enjoy peaceful golden years without surprises, and to receive the maximum amount of money you’re entitled to!
What are the minimum requirements to retire?
In the United States, there are two essential conditions that beneficiaries must meet in order to start receiving their pensions.
We’ll break them down below but here’s a spoiler: users must meet a minimum age requirement and must have a minimum number of work credits accumulated throughout their working years, otherwise they won’t be allowed to retire with benefits.
The minimum age
The age requirement is essential to start receiving Social Security payments. In the United States, the Full Retirement Age is set at 67 for most workers (those born after 1960 or in that same year).
However, there is a minimum age to stop working and begin receiving SSA checks, and that is at 62 years old. The moment you turn 62, you can apply for retirement.
What are work credits?
They are like “coins” from Social Security. Throughout your working life, the system assigns credits based on the earnings you have received (and contributed to the Administration through taxes and income declarations).
These credits accumulate in your work history, and you can earn 4 credits per year as long as you exceed a certain income threshold (in 2025 you will need to earn $1810 per credit, which means that a person must have an annual income of $7240 to reach the maximum number of credits).
And how many do you need to retire?
To be able to retire and collect Social Security, at least 40 credits are required, which is equivalent to 10 years of work with sufficient earnings.
But be careful, they don’t have to be consecutive years as long as you meet the required number of credits. And beware, if these criteria are not met, access to retirement will be denied.
What happens if you apply for early retirement?
As we mentioned earlier, the minimum retirement age is 62 years, but doing so before full retirement age (FRA), although it may sound tempting, will reduce your monthly payments by up to 30%.
However, postponing retirement until age 70 (for those workers who can afford it) will result in an 8% increase in the amount for each year you delay retirement, up until the maximum, which as we said, is 70 years old. Even more tempting, right?
Can you accumulate more credits than necessary?
Yes, and it’s quite common, but we have bad new, accumulating more than 40 credits will not increase the monthly amount you receive in your check, so once you reach the limit, it won’t “help” anymore, at least not for retirement income. But for other types of benefits, yes, it may be needed.
Why these measures now?
Mainly for two reasons. The first is that life expectancy has increased in recent years, and as a result of this, it is impossible for the SSA to absorb all the payments for people exiting the labour system.
So, limiting access to benefits in this way helps prevent the system from collapsing and protects it while other types of solutions are explored.
If you’re already thinking about your retirement, good luck! Check how many credits you’ve accumulated and calculate when is the best time for you to apply for your benefits. Welcome to the golden age!
