Once you start collecting Social Security retirement benefits, the earnings gap in the working world continues, albeit on a smaller scale.
Benefits depend on how much you earn during your career. The higher your income, the higher your retirement check will be. Likewise, lower-income Americans will receive below-average Social Security benefits.
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One thing about Social Security is that it is not an “entitlement” program, although some people like to call it that. It operates more like a government-run pension plan. You don’t “qualify” for Social Security retirement benefits — you earn them by working a certain number of years and paying into the system through payroll taxes.
According to the Social Security Administration, you need to have worked at least 10 years or 40 credits to qualify for Social Security retirement benefits. Benefits are based on average indexed monthly earnings over up to 35 complete years of employment. The 35 highest earning years are used in the calculation.
If you work for 35 years or more, you can maximize your Social Security check. If you work for less than 35 years, your benefits won’t be as great – no matter how much money you make during your career. If you have worked for less than 35 years, a “zero” on your earnings record could seriously impact your benefits. That’s because zero will drag down your average monthly income.
Americans who earn lower wages while working naturally receive lower Social Security checks in retirement. As of March 2024, the average retirement benefit is $1,864.52 per month, according to the Social Security Administration. The maximum payout for Social Security recipients in 2024 is $4,873 per month, and you’ll only get that amount if you’ve earned a very high salary for more than 35 years.
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The SSA does not track average benefits by income group. However, the Center on Budget and Policy Priorities conducted an analysis last year that looked at average Social Security benefits by income bracket.
According to the analysis, for a low-income earner retiring at age 65 (earning 45 percent of the average wage), the average annual Social Security benefit is $14,824. Two thirds.
A special minimum social security benefit was established in 1972 to benefit low-income workers. According to the SSA, to be eligible, you must have had Social Security coverage for at least 11 years. According to SmartAsset, a year of coverage is any year in which a worker pays a “substantial amount” into the Social Security trust fund.
