A University of Alabama Law School Clinical Program funded in part by West Alabama Regional Commission

2. Who can collect, and when?

The best source of practical information about Social Security benefits is the literature made readily available by Social Security. District offices provide a multitude of readable brochures, and materials can be accessed on the Web and by calling Social Security (1-800-772-1213), but here are some basics:

In order to qualify for Social Security retirement benefits you must be credited with at least 40 “quarters of coverage”. A quarter of coverage is earned by working for a “covered” employer (almost all are covered) and earning a certain minimum amount in a given period. Until 1978 the specified amount had to be literally earned within a quarter to be credited. Since 1978 workers who earn a certain dollar amount any time within a calendar year can earn coverage credits. For example, a worker who earns $900 in 2004 will be credited with one quarter of coverage. If she earns $3,600 or more she will be credited with four quarters. The dollar amount increases from time to time, and no one can earn more than four quarters’ credit in any one year.

For disabled workers the number of quarters of coverage required for benefit entitlement may be different. Depending on your age, you may need fewer quarters of coverage to collect benefits, but you must have earned a minimum number of credits, some of which were earned in years just prior to disability. Workers found to be qualified for SSD, or Social Security Disability, may collect benefits for themselves and for their families. Disability is defined as being so severely impaired, physically or mentally, that you are unable to perform any substantial gainful work that exists anywhere in the economy. Benefits are not payable to anyone unable to work only because of substance addiction.

It can be difficult to establish entitlement to disability benefits. Workers who by any measure of common sense would appear to be qualified may be denied when they first apply. If that is your experience and you feel you are entitled, you should appeal within the time stated. At that point it would be wise to obtain the assistance of an attorney who specializes in Social Security work. The average time for resolving an appeal is about two years, but by far the majority of those who appeal are ultimately successful.

Social Security sends periodic statements of earnings to workers. You should always check to be sure all earnings are correctly recorded. The process of calculating benefits is briefly outlined below.

You can collect as early as age 62, but your benefits will be reduced by a small percentage for each month you collect prematurely and the reduction is permanent. If you start at age 62 your benefits will be reduced by about 20%. On the other hand, you will have three years of additional benefits. If you are not working it generally takes about 15 years for you to begin to “lose” money by collecting early. If you continue working, however, the calculation is more complicated and it is different in each case.

If you wait to start collecting until age 70, your benefits will increase a little for each month you delay collecting. There may be less incentive to delay, however, now that the “work penalty” for earnings for those aged 65-70 has been eliminated. Until January, 2000, a worker in that age bracket forfeited $1.00 in Social Security benefits for every $3.00 earned over a specified limit . Currently, a worker may earn up to $25,000 in the year (s)he attains 65, before reaching 65). Those who collect Social Security retirement benefits at ages 62-65 still forfeit $1.00 of every $2.00 earned over a specified amount ($11,640 per year, or $970 per month in 2004.)

Eligible spouses may collect one half of a husband’s or wife’s benefit amount. For spouses who have worked themselves, Social Security automatically calculates and pays the most favorable benefit between 100% of the individual’s benefit, and 50% of the spousal benefit.

Go back