Social Security benefits are a cornerstone of financial security for many American retirees, providing a safety net to ensure a degree of financial stability in their later years. However, not all U.S. employees are eligible for Social Security benefits. It’s crucial to recognize the various categories of workers who may miss out on these benefits and understand the reasons behind their exclusion. Here are insights into eight types of Americans who may not be eligible for Social Security:
1. Workers With Too Few Social Security Credits:
- Social Security eligibility is contingent on earning a minimum of 40 Social Security credits, equivalent to roughly 10 years of employment. These credits are earned based on income, with a maximum of four credits attainable per year. Individuals failing to accumulate the required credits over their working years may not qualify for Social Security benefits.
2. Workers Who Die Before Age 62:
- Social Security retirement benefits typically commence at age 62. In the unfortunate event of a worker’s premature death before reaching this age, dependent children and spouses may be entitled to survivor benefits. However, the deceased worker won’t directly receive retirement benefits.
3. Certain Divorced Spouses:
- Divorced individuals may claim Social Security benefits based on their ex-spouse’s earnings. However, specific criteria must be met, including being single, aged 62 or older, and having a marriage duration of at least 10 years. Those divorced spouses falling short of these requirements may not be eligible for spousal benefits.
4. Workers Who Retire in Certain Foreign Countries:
- U.S. citizens retiring in certain countries, such as Azerbaijan, Belarus, Cuba, and others, may face restrictions on receiving Social Security benefits. The government’s Payments Abroad Screening Tool helps assess eligibility based on the chosen retirement destination.
5. Certain Noncitizens:
- While certain noncitizens and legal immigrants with 40 Social Security work credits can receive Supplemental Security Income (SSI), others may benefit from totalization agreements. These agreements allow individuals from specific countries to qualify for prorated benefits based on a combination of U.S. and foreign work credits.
6. Certain Government and Railroad Employees:
- Some government employees, particularly those under the Civil Service Retirement System (CSRS) before 1984, may not be covered by Social Security. Similarly, certain railroad employees with substantial service may have their retirement benefits handled by the Railroad Retirement Board rather than Social Security.
7. Self-Employed Tax Evaders:
- Self-employed individuals must pay self-employment tax to contribute to Social Security. However, those evading taxes and lacking a record of payments may be excluded from receiving Social Security benefits.
8. Certain Immigrants Over Age 65:
- Retired immigrants coming to the U.S. may not have the required 40 U.S. work credits for Social Security benefits. Totalization agreements can offer a solution by combining prorated U.S. benefits with benefits from their home country.
Understanding these exclusions is vital for individuals to plan for alternative income sources and make informed financial decisions. While Social Security is a crucial aspect of retirement planning, certain categories of workers may need to explore other avenues for financial security in their later years.