What are work credits in relation to Social Security?

Work credits are essentially a way to quantify an individual's earnings and contributions to the Social Security system over their working lifetime. To qualify for various Social Security benefits, such as retirement, disability, or survivors' benefits, individuals must earn a certain number of work credits.

Work credits are earned based on your earnings; for 2023, you earn one credit for every $1,640 in wages or self-employment income, up to a maximum of four credits per year. The total number of credits required to qualify for benefits varies depending on the type of benefit—generally, you need 40 credits for retirement benefits, which typically equates to about 10 years of work.

This system ensures that benefits are related to the amount of work an individual has contributed to the Social Security fund, reflecting a lifetime of earnings rather than arbitrary factors. Thus, the significance of work credits lies in their role as a measure of an individual’s eligibility for Social Security benefits based on their contributions to the system.