In May, approximately 67 million individuals were recipients of a conventional Social Security benefit, with over 49 million being retired workers. Consistent surveys over many years reveal that as many as 90% of these retired workers rely to some extent on their monthly payout to meet their expenses. This signifies that Social Security is a crucial financial support for tens of millions of senior citizens annually.
Nevertheless, not all individuals are eligible for the United States‘ primary retirement program. A considerable number of seniors, specifically around 2.7 million aged 60 and above, will never receive a Social Security benefit. The Majority of Americans Obtain Their Social Security Retirement Benefit through Conventional Means.
Social Security retired-worker payout is not automatically granted based solely in the United States
As of 2023, each work credit (equivalent to a quarter of coverage) is earned by receiving $1,640 in earned income, such as wages and salary (excluding investment income). The maximum number of credits that can be earned in a single year is four. Consequently, workers can reach the maximum of four work credits in 2023 by earning $6,560 (4 x $1,640) in total income. This means that even part-time workers have a reasonable opportunity to qualify for Social Security benefits, as the eligibility criteria are set at a relatively attainable level.
It’s important to note that a Social Security retired-worker payout is not automatically granted based solely on U.S. citizenship or birthright. Instead, the primary way most individuals qualify for a Social Security check in their retirement years is by accumulating 40 work credits throughout their lifetime.
While the majority of traditional beneficiaries are full-time and part-time workers who accumulate 40 lifetime work credits, there exist a few exceptions. Individuals with long-term disabilities, for instance, can be eligible for benefits even without meeting the required 40 work-credit threshold. A scaled age-to-credits table is utilized to assess eligibility for a disability payout in such cases.
Similarly, there are circumstances where individuals with no work history whatsoever can still qualify for a Social Security benefit. For instance, if a spouse, who served as the sole earner throughout their lifetime, were to pass away before their partner, the surviving partner, despite lacking a work record and the typical eligibility for Social Security, may qualify for a survivor benefit.
Can individuals with no work history qualify for Social Security benefits?
Individuals with no work history may still qualify for Social Security benefits through certain programs. Here are the options:
- Supplemental Security Income (SSI): SSI is a program for the financially needy among the disabled population. It is based on financial need rather than work history. To qualify for SSI, individuals must meet the income and resource limits set by the Social Security Administration (SSA).
- Social Security Disability Insurance (SSDI): While SSDI typically requires a work history and the payment of Social Security taxes, the work requirements are not as stringent as you may think. If you have some work history but don’t meet the requirements for SSDI, you may still qualify for SSI.
- Noncitizens: Certain noncitizens who have earned 40 Social Security work credits in the United States are eligible to receive SSI benefits. Additionally, immigrants from countries with totalization agreements with the United States may qualify for prorated benefits based on their work credits earned abroad combined with their U.S.
- Certain Divorced Spouses: Divorced spouses who meet specific criteria may be eligible to collect Social Security benefits based on the earnings of their ex-spouse. However, the marriage must have lasted for at least ten years to qualify.
Approximately 2.7 million individuals are “never beneficiaries” of Social Security
Out of the approximately 76.9 million individuals aged 60 and older, as indicated by the U.S. Census Bureau’s data from 2021, approximately 96.5% are entitled to some form of Social Security benefit or protection. However, for the remaining 3.5% (equivalent to around 2.7 million seniors), there will be no Social Security benefits awaiting them in the future. These individuals, referred to as “never beneficiaries” by the Social Security Administration (SSA), can be classified into four distinct categories.
The inclusion of immigrants through legal channels is crucial for the sustainability of Social Security. The majority of immigrants who come to the United States are typically younger individuals, contributing to the program through payroll taxes over several decades of active employment. However, late-arriving immigrants (defined as individuals aged 50 and above by the SSA) may not have sufficient time to accumulate the required 40 lifetime work credits to qualify for a Social Security retirement benefit. Late-arriving immigrants represent 45.8% of all never beneficiaries, according to the SSA.
While the eligibility criteria for retirement benefits are relatively attainable for full- and part-time workers, not everyone can accumulate the necessary 40 work credits or earn sufficient income to qualify. The SSA reports that 39.6% of all never beneficiaries are American citizens who lacked a substantial work history or earnings to meet the requirements for a Social Security benefit, excluding late-arriving immigrants.
The third category of never beneficiaries comprises primarily of select state and local government employees who are not covered under Social Security. Some of these workers have pension coverage through their public employment, which means they will not receive Social Security payouts. Non-covered workers account for 13.4% of never beneficiaries, as indicated by the SSA.
The fourth and smallest group of never beneficiaries consists of individuals aged 60 and older who pass away before being able to claim Social Security benefits. While eligible workers can begin receiving their retirement benefits as early as age 62, the program incentivizes patience by allowing benefits to increase by up to 8% per year if claimed later. Historical data suggests that waiting is a wiser decision for individuals seeking to maximize their lifetime benefit from the program. Beneficiaries who pass away before claiming benefits make up 1.2% of the total of nearly 2.7 million never beneficiaries.
The different categories of Social Security “never beneficiaries”: Are they covered?
There are four categories of the “never beneficiaries” categories in the Social Security system. The first one is the “non-workers”, people who have not paid into the Social Security system because they have never worked in a job covered by Social Security. This may include individuals who have been primarily engaged in unpaid work, such as stay-at-home parents, caregivers, or individuals with disabilities that prevent them from working.
Afterward, the other category is constituted by the “low-income workers”, also known as “infrequent workers”, some that may have worked in jobs covered by Social Security, but earned incomes below the threshold for earning credits. These low-income workers may not have accumulated enough credits over their working lives to qualify for benefits. They also have the right to receive the benefits.
The third category is the “non-citizen immigrants”, people who have not met the necessary residency requirements may also be considered never beneficiaries. To qualify for Social Security benefits, immigrants must have a certain number of work credits and meet specific residency conditions.
The last group is constituted by the “federal employees”, including those hired before 1984, participate in alternative retirement systems instead of Social Security. As a result, they may not be eligible for Social Security benefits unless they have worked in jobs covered by Social Security outside of their federal employment.
All the people in these categories could still be eligible for other forms of social assistance, such as the Supplemental Security Income, or even the Medicaid, depending on their circumstances and financial situation. If you’re in one of these categories, and you need some social aid, you can even contact the SSA and ask for the step to follow to qualify.
You might receive your Social Security payment late this month
Benefit payments for July will be credited to accounts on Monday, July 3rd. These payments are directly deposited on the first banking day of the month, typically the first day, unless it falls on a weekend or holiday. Since July 1st, 2023 falls on a weekend, the first banking day is on July 3rd.
Usually, the payments start to arrive to the bank accounts or mailboxes on the first day of the month, but, the 1st of July is a Sunday, so, the next business day is July 3. That’s why you have to wait two additional days this month.
According to the SSA, this is the calendar of payments for July 2023:
June 30: SSI recipients (July payment)- July 3: Recipients who began receiving payments before May 1997
- July 12: Beneficiaries with dates of birth between the 1st and 10th day
- July 19: Beneficiaries with dates of birth between July 11 and 20
- July 26: Beneficiaries with dates of birth between 21 and 31
Significant variations in poverty rates among the four categories of never beneficiaries
The SSA also highlights significant variations in poverty rates among the four categories of never beneficiaries. Due to the pension benefits provided by state and local governments, less than 9% of non-covered workers fall below the poverty line. Similarly, for workers who passed away before receiving benefits, the poverty rate stands at 8.1%.
In contrast, a notable majority of infrequent workers (67.2%) and late-arriving immigrants (57.3%) were living in poverty as of August 2021. While this represents a relatively small portion of seniors, it is evident that America’s highly successful retirement program has provided some form of financial stability to the remaining 74.2 million individuals aged 60 and over who are covered by the program.