Who Is Eligible for Social Security Retirement Benefits?

Social Security retirement benefits are not based on need but rather on income earned during your earning life. The Social Security Administration (SSA) keeps a record of earnings over your working life and pays benefits that are based on the average amount earned, provided a minimum number of work credits have been accumulated. Only income on which Social Security tax is paid is considered in calculating these work credits.

To be eligible for Social Security retirement benefits, a worker born after 1928 must have accumulated at least 40 quarters of work in "covered employment".  A "quarter of coverage" generally means the three-month calendar quarter. In addition, you must earn at least $1,410 in a quarter (in 2020) for it to count. However, the SSA looks at how much you earned in a year and divides that figure by the minimum amount required to earn credit for a quarter. Thus, if you earn at least $5,640 in January and February of 2020 and don't work the rest of the year, you will receive credit for four quarters of work ($5,640/$1,410 = 4).

For Social Security purposes, "retirement" is defined as whenever you choose to begin receiving benefits after you reach age 62--whether or not you are actually still working. Starting at age 62 you can begin receiving benefits, provided you have accumulated the minimum required quarters of coverage (although you will pay a penalty for retiring before your "full retirement age." a number that ranges from 65 to 68 years and eight months depending on your year of birth). You do not have to actually stop working to be eligible to receive Social Security retirement benefits, although if you have not yet reached your full retirement age your benefits may be reduced depending on how much income you earn. Conversely, you can stop working entirely and still postpone receiving Social Security retirement benefits. However, if you stop working, your average earnings over your working life may be less and this may result in a reduced benefit.