The Boring Newsletter, 9/21/2025

Social Security credits are more interesting and a lot more complicated than you might think

Hi Friendos,

Today’s topic is Social Security credits – how you earn them and what you get when you do.

Earning one Social Security “credit”

Earning a credit is like a pass/fail class, you either make it or you don’t. In 2025, “you receive 1 credit for each $1,810 of earnings, up to the maximum of 4 credits per year.” For millions of workers with W-2 private sector jobs, this statement is precisely correct. There are also millions of workers with other situations. Here are some examples:

• About 1/4 of public employees like teachers, police, and firefighters do not pay Social Security tax on their income and don’t earn Social Security credits. Well, you think, they get sweet pension plans so they are all set. Maybe some of them are all set, but a few years ago, the Social Security Administration estimated that around 750,000 to 1 million of those workers will receive less in pension benefits as compared to Social Security.
• Prisoners who get paid at all for their prison labor often don’t pay Social Security tax on their prison labor income or earn Social Security credits. Separately, it is also noteworthy that prisoners do not receive Social Security benefits while incarcerated.
• Students who work jobs on their college campus do not earn Social Security credits.
• People who work for religious organizations only sometimes pay Social Security tax and earn credits. It may depend on whether the employer elected to exclude them from coverage. Some of these workers do earn credits if they pay self-employment tax. There are certain rules if you are a “Christian Science practitioner or reader,” if your religious order has not taken a “vow of poverty,” or if you are part of a “married couple missionary team.” It’s complicated.
• A seasonal agricultural worker only has their wages covered if they are paid on a piece-rate basis, were employed less than 13 weeks during the prior year, commute to work daily from their home, and are a hand-harvest laborer. They also must have been paid $150+ in cash wages or their employer reported more than $2,500 agricultural labor expenses for the year.
• Certain rail workers are covered under the Railroad Retirement Board, not Social Security.

It is worth noting that self-employed workers might work full-time all year and not pay Social Security tax on enough income to earn credits if they qualify for a lot of legitimate tax deductions, such as a self-employed farmer, or if they simply have a low-income year.

There are also those who don’t report all their income, such as people working under the table or self-employed people who intentionally underreport. That income won’t count toward Social Security credits. And it is only labor income that counts – passive income from sources like investments or royalties is not subject to Social Security tax and won’t earn credits.

What Social Security credits get you

In short, they get you retirement benefits (if you live long enough), disability benefits (if you can run a gauntlet of requirements and certifications), survivor’s benefits for qualifying survivors, and reduced or $0 premiums for Medicare Part A (hospital inpatient insurance).

Retirement benefits: to qualify for a monthly Social Security check starting at age 62 (or older depending on when you claim benefits) you need 40 credits.

Disability benefits: you need 6-40 credits depending on your age when your (qualifying) disability began.

Survivor benefits: the person who dies must have earned 6-40 credits before their death for various types of family members to receive possible benefits:

• Surviving spouse age 60+, unless they have a disability in which case age 50+
• Surviving spouse who cares for the deceased’s child under age 16, unless the deceased’s child has a disability, in which case the child can be any age
• Surviving divorced spouse under certain conditions (e.g., outcome may depend on whether the divorced spouse got remarried)
• Unmarried children under age 18, unless they are full time in elementary school or high school, in which case they can be 18 or 19 years old.
• Unmarried children age 18+ who “developed a disability before age 22 and whose condition(s) remains the same.
• Parents age 62+ who were financially dependent on their deceased child.

Medicare Part A monthly premiums: $0 if you or your spouse have 40+ credits, $285 with 30-39 credits, and $518 with fewer than 30 credits.

However, if you have ALS (Lou Gehrig’s disease) and get SSDI (Social Security Disability Insurance), you get $0 premiums. Or if you have end-stage renal disease, in which case you may not need 40 credits for premium-free part A depending on your age, or if you are the dependent of your parent or spouse and they have enough credits.

This system is so complicated because we are very worried about who is “deserving” and who is not. We only want people to get retirement benefits if they worked enough to deserve them. Oops, that leaves out people who didn’t work outside the home and have a spouse who died. We have a problem with non-paid labor being valued at a $0 societal contribution…not to worry though, the SSA has a publication called “5 Things Every Woman Should Know About Social Security.” It was published in 2021!  

Ok, so all you widows who did not work outside the home, we’ve got you covered with some extra rules. Oh, those of you who financially support your parents are wondering how they’ll get by if you meet an untimely end? Ok, we’ll write in some extra rules to include them too. And same for people who are disabled (but only some and not others). And on and on. What if we began with the idea that all of us are deserving? We could have program rules that an ordinary person could understand and navigate, with minimal administrative burden on individual program recipients and minimal cost to administer. A system that is for the people…all the people.

-Stephanie