Americans who won’t qualify to receive Social Security retirement benefits are relatively rare, but if you’re one of them, you need to know so you can make sure you have other sources of retirement income.
You’re most likely to fall into this group if you are an immigrant who arrived in the United States when you were 50 or older. These Americans have had significantly less time than native-born Americans and younger arrivals to earn the 40 work credits needed to qualify for benefits. But they aren't the only ones who won’t qualify.
Americans Who Won't Get Social Security
1. Workers with Too Few Social Security Credits
A minimum requirement to collect Social Security retirement benefits is performing enough work to earn 40 Social Security credits. Roughly, 40 credits equals 10 years of work. More specifically, in 2017, you earn one credit for each $1,300 you earn, and you can earn a maximum of four credits per year.
If you earn the federal minimum wage of $7.25 an hour, you’ll need 179.3 hours of work to earn 1 credit toward Social Security. By working just 15 hours a week at this wage, you’ll earn the maximum credits per year. That means even those who work part time so they can attend school or care for a child – or those who work part time because they can’t find full-time work – can earn Social Security credits without too much trouble.
Earned credits never expire, so anyone who has left the workforce with close to 40 credits might consider going back and doing the minimum additional work they need to qualify. (For more, see Understanding Social Security Eligibility.) You can check the number of credits you have using the information here.
2. Workers Who Die Before Age 62
The minimum age to start claiming Social Security retirement benefits is 62; those who die young won’t receive the benefits they’ve earned. That doesn't necessarily mean their benefits will be lost, though. Dependent children and spouses may be entitled to survivor’s benefits. For example, at age 60, widows and widowers can begin receiving Social Security benefits on their deceased spouse’s record. And terminally ill patients can apply for Social Security Disability Income, which means they will still get some benefit from their contributions to the system.
What if you’re terminally ill and you’ve reached the minimum retirement age? If you’re single, claiming right away may be the most sensible strategy, but if you have a spouse, postponing may entitle him or her to greater benefits. (For related reading, see Filed for Social Security Too Soon? Two Ways to Fix It.)
3. Certain Divorced Spouses
Some people’s spousal Social Security benefit will be higher than their own Social Security benefit – for example, stay-at-home parents who relied on their spouse’s income to support the household. Those spouses will be at a disadvantage when claiming Social Security if their marriage lasts fewer than 10 years because they won’t be eligible to claim Social Security benefits from their former spouse’s earning record. Instead, they’ll have to accumulate enough work credits on their own or rely on the earnings record of a new spouse. (Learn more in Don’t Forget Your Ex-Spouse’s Social Security Benefits and What Divorcees Should Know About New Social Security Rules.)
4. Workers Who Retire in Certain Foreign Countries
U.S. citizens who travel to – or live in – most foreign countries after they retire can usually still receive Social Security benefits. But if that country is Azerbaijan, Belarus, Cuba, Georgia, Kazakhstan, Kyrgyzstan, Moldova, North Korea, Tajikistan, Turkmenistan, Ukraine, Uzbekistan or Vietnam, the government can’t send you Social Security payments. Exceptions may be available in all of these countries except Cuba and North Korea, however. Use the government’s Payments Abroad Screening Tool to see if you will be able to continue receiving Social Security benefits while living abroad. (For related reading, check out How to Plan Retirement in Ecuador.)
5. Certain Legal Immigrants
Legal immigrants who have earned 40 Social Security work credits in the United States are eligible to receive full US Social Security benefits. Immigrants who don’t have enough US credits but who come from one of the 26 countries with whom the United States has social security agreements called totalization agreements can qualify to receive prorated benefits from each country based on their work credits earned abroad combined with their US work credits, an arrangement that’s especially helpful for older immigrants who aren’t likely to accumulate 10 years of work in the United States before retiring. Workers who haven't earned at least six US credits, however, can’t receive payments under totalization agreements. (For related reading, see How Social Security for Legal Immigrants Works.)
6. Government Employees Who Don’t Pay Social Security Taxes
Federal government employees hired before 1984 may have been grandfathered into the Civil Service Retirement System (CSRS), which provides retirement, disability and survivor benefits. These workers don’t have Social Security taxes deducted from their paychecks and aren't eligible to receive Social Security benefits unless they’ve earned benefits through another job or a spouse. However, in those cases, CSRS pension payments may reduce Social Security benefit payments. Government workers who are covered by the Federal Employees Retirement System (FERS) are eligible for Social Security benefits.
State and local government employees, such as those who for a state or local government agency – including a school system, college or university – will not receive Social Security benefits if they do not pay Social Security taxes, but they generally receive pension benefits from their employers. However, most state and local employees do have Social Security protection under a government law called a section 218 agreement. (For more, see Top Retirement Strategies for Government Employees.)
7. Self-Employed Tax Evaders
Self-employed workers pay self-employment tax to cover both the worker’s and the employer’s portion of Social Security contributions. The tax is calculated and paid each year when these workers file their federal tax returns. Those who don’t file tax returns don’t pay Social Security taxes, unlike employees whose employers withhold and remit their Social Security taxes from each paycheck.
If you have no record of paying into the system, you’re not going to get payouts from it. But then, if you’ve been successfully evading taxes for a lifetime, you have no right to Social Security benefits. Your illegally retained untaxed earnings will have to fund your retirement. (For related reading, see Social Security for the Self-Employed: How It Works.)
8. Certain Immigrants Over 65
Retired people who immigrate to the United States won’t have the 40 U.S. work credits they need to qualify for Social Security benefits. One way to rectify this problem is to earn six work credits in the United States and receive prorated US benefits combined with prorated benefits from your former country under a totalization agreement. This solution makes sense for workers who also don’t have enough benefits in their home country to qualify for that country’s equivalent of social security payments. In many cases, late-arriving immigrants come to the United States on family visas and rely on that family member for financial support.
Older immigrants who don’t qualify for US Social Security and whose countries’ laws allow them to receive benefit payments while residing in the United States can claim their social security or pensioner’s benefits while living abroad. (For further details, see Immigrants Over 65 and Social Security Benefits.)
The Bottom Line
Almost all retirees in the United States do receive Social Security benefits when they retire. But those who have spent little time in the U.S. workforce, whether due to caregiving or working abroad, may not qualify. Some government workers are also not eligible. With luck, people who do not qualify for Social Security retirement benefits have another form of safety net they can count on, whether it’s a government pension, benefits from their home country or a family member who supports them financially.