In order to receive Social Security benefits, it is essential to have earned enough work credits. Some recipients may wonder if the COLA increase for 2025 may affect the number of work credits they need.
As a matter of fact, the number of work credits you will need to file for retirement at 62 will be the same after the Social Security COLA increase for 2025. However, you may need more money in earnings to get one single credit.
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How the 2025 COLA may affect Social Security credits
When there is a COLA boost, retirement benefits increase. In this way, the Social Security Administration helps retirees maintain their buying power. Otherwise, they may not be able to make ends meet after soaring inflation.
The thing is, retirement benefits go up, but also the quarter of coverage. That is the amount of money in earnings you need to make per year to get one single work credit.
For example, the earnings you needed to get 1 work credit in 2023 was $1,640. However, the amount went up to $1,730 in 2024. In fact, it increased more than the 3.2% COLA.
How much did Social Security’s quarter of coverage increase?
After the 2024 COLA increase, the quarter of coverage increased by 5.49%. Since the price of just one work credit is $1,730 in 2024, you will need $6,920 in covered earnings to get 4 work credits. 4 is the maximum number of credits you can get per year.
Keep in mind that you cannot buy work credits. The only way to earn work credits for future retirement benefits is to pay taxes to the Social Security Administration.
In fact, to get Social Security retirement benefits, you will need to have earned 40 work credits at least. This will only give you a small direct deposit, so it is advisable to work for a minimum of 35 years even if ten years of work is all you need to get benefits from SSA.