Here is a good news, you do not only earn work credits through a regular employment. There are different ways through which the Social Security Administration may determine the amount of work credits for your disability eligibility. However, it is imperative that you make the best use of these income sources to maximize your benefits!
- Your salary up to the Social Security tax limit
Almost every employee including you would know of the fact that the salary amount credited in your accounts each month is a little less than that on your wage contracts. This is because every employer withholds social security taxes on your paychecks as directed by the government. However, here is the catch: the taxable amount for social security per year has a certain threshold of $132,900 as of 2019. This means that any income you earn from your regular job above this amount would not be taxed for the social security.
- Commission and tips
You do not need to have a high level white collar job or a 6 figures income yearly to be able to acquire work credits for social security. This means that commissions or tips acquired by salesperson or waiters would also qualify for income considered towards calculating work credits. Any tip or commissions above $20 would be qualified as income towards work credits.
- Vacation pay
If your employer grants you vacation leave without cutting on your salary for those months, the income from salary in these months would also count towards earning work credits. For some people with high monthly salaries, a vacation each month for a consecutive 12 months could increment a total of 12 work credits just like that. Hence, you would be able to earn a good number of social security credits even through a vacation pay.
Maximizing your disability benefits
Once you have earned the total of 40 work credits required for social security benefits eligibility you do not need to worry about acquiring enough work credits anymore. Yet you may still need to consider some steps to maximize on your benefits without losing a substantial amount through carelessness.
For instance, let's say you worked for 32 years and averaged $85,000 in qualified income for each of those years. When calculating your benefits, the folks at Social Security would add two zeroed-out years to give you the full 35 years for averaging. In that case, instead of having your benefits based on $85,000 worth of earnings, you'd get benefits based on just $75,429 worth of average earnings. Using the 2017 benefits formula, you'd end up with Social Security benefits of $2463 per month if you claimed them at full retirement age -- not bad, but less than the $2520 you'd get every month if you waited just two more years to retire. That's almost $700 extra per year for the rest of your life!
Now you can see why it's important to have at least 35 years during your career of the highest possible income from qualified sources, so that you can get the biggest possible Social Security benefits.
This may be complicated to calculate each year's earnings and work credits you acquired for each year. You could consider talking to a social security attorney to explain the details to you in detail and work towards a better income source through retirement or disability benefits.