1. Resources>
  2. Retirement Income>
  3. Requirements for Social Security Benefits

Requirements for Social Security Benefits

Jan 18, 2023

Blueprint Income Team

With Social Security playing an increasingly important role in retirement planning, it’s important to fully understand what you need to do during your working years to qualify for Social Security benefits.

  • You need 40 credits to qualify for Social Security benefits
  • Social Security benefits are impacted by the Cost of Living Adjustment, which accounts for inflation

While most people know that Social Security plays a significant role in retirement planning, many are surprised that Americans have to qualify to receive the benefits Social Security offers.

Put simply, Social Security credits are the “building blocks” of your benefits. In a lot of ways, earning Social Security credits is an effortless process, but without enough credits, the Social Security Administration (SSA) has no obligation to deliver your monthly benefit check.

It’s easy enough — for retirement you need 40 credits. But how do you earn enough of these credits? You earn 1 credit for every $1,260 (which is adjusted for inflation over time) of taxable earnings. You can earn up to 4 credits per year, meaning that you’ll have an adequate number of credits after 10 years of work.

Once you qualify for Social Security benefits, your individual benefit level is determined using the average of your highest 35 years of earnings, the overall length of your career, and an index factor for that specific year. Your benefits are also impacted by what’s called a Cost of Living Adjustment (COLA), an adjustment made to Social Security to account for the effects of inflation. COLAs are generally equal to the percentage increase of the Consumer Price Index for urban wage earners and clerical workers (CPI-W) for a specific period.

Having enough Social Security credits is the first brick in the foundation laid to making sure you receive your monthly paycheck.

The Three-Legged Stool

The old retirement adage says that we should use the three-legged stool approach to prepare for retirement:

  1. Social Security – This is the government’s retirement plan for us. As long as you’re working (to earn the credits required addressed above) and paying taxes, you’re earning Social Security credits. When you retire, you’ll start receiving monthly Social Security income that will continue for as long as you’re alive.
  2. Pensions – This is the form employer retirement plans used to take. They provided a steady monthly paycheck no matter what happened in the market and no matter how long you lived. Because Social Security only covers, on average, 40% of one’s retirement expenses, people leaned on pensions for the rest. The problem today is that the second leg of the three-legged stool is wobbly or gone. Instead of offering pensions, employers are providing 401(k)s and matching contributions, which helps with the third stool.
  3. Personal Savings – So that you have access to money outside of, and beyond, monthly Social Security and pension checks, you need to save on your own. This money is generally invested differently to serve two purposes. First, money invested in liquid money market or savings accounts provides a cushion and access to extra cash in case of emergency. Second, money beyond that can be invested in the market for a high potential return. This is the money you’re comfortable losing.

How to Supplement Your Social Security

According to the Social Security Administration, individuals aged 65 and over in the top quartile for income (an average of $78,180) received only 18% of their income from Social Security. So where does the remaining 82% come from?

Purchasing an Income Annuity

Income annuities provide a guaranteed lifetime stream of income during your retirement. You pay a lump sum upfront to purchase your annuity from an insurance company. Then, the insurance company sends you a series of payments for the rest of your life.

How Can I Purchase an Income Annuity?

At Blueprint Income, we offer annuities from more than 15 top rated insurance companies. Click below to get real-time personalized quotes.

 Income Annuity Quotes


From there, you’ll get access to our annuity guides and team of specialists to help you analyze your retirement finances and walk you through the application process.

Blueprint Income Team

We are a team of finance, insurance, and actuarial professionals working to make it easier for everyone to achieve a steady and comfortable retirement. We write about annuities (the good and the bad) and provide strategies to help Americans prepare for retirement.


Can I Retire?

Jan 18, 2024

Blueprint Income Team

Thumb - Can I Retire?