What To Do If You Find Out You Don’t Qualify for Social Security

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Most Americans contribute to Social Security as they work throughout their careers, then expect a payout once they retire. In fact, for some retirees, Social Security is the primary source of their income in retirement, if not their entire nest egg. But what happens if you are nearing retirement and you find out that you don’t qualify for Social Security? Here are some steps to take if you find yourself in this situation.

Social Security 2022: How the COLA Will Increase Benefits for the Average Senior Couple

1. Find Out Why

Social Security is a benefit that most Americans enjoy, but it’s not a guaranteed income program. In order to get something out of Social Security, you have to contribute. When you work, Social Security taxes are taken out of your paycheck. That’s the money that helps fund ongoing payments to retirees, and it’s the money that you will receive from current workers once you retire — as long as you qualify.

To qualify for Social Security, you must earn at least 40 “quarters of coverage.” The amount you have to earn to qualify for one quarter of coverage varies from year to year based on inflation. For 2021, earnings of $1,470 qualified as one quarter of coverage. In 2022, that amount jumps to $1,510.

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If you visit the Social Security Administration website, it will tell you how many quarters of coverage you have earned and show you your complete earnings record. In black and white, you will see why you have not qualified for Social Security and by how much you’ve fallen short.

See: All You Need To Know About Collecting Social Security While Still Working

2. Make a Plan

If you haven’t yet retired, you may still have time to qualify for Social Security. It doesn’t take a lot of money to earn one quarter of coverage, and you can earn up to four per year. If you’re only, say, eight quarters shy of qualifying, you can reach that threshold in just two years. If you need more quarters than that, you might have to plan on working a bit longer in order to qualify. Although Social Security isn’t likely enough to cover all of your living expenses in retirement, it can be a big boost to your other retirement savings, so it’s worth the effort to get qualified. 

Find Out More: The Biggest Problems Facing Social Security

3. Check Your Spousal Benefits

If you’re far away from qualifying for Social Security based on your own earnings record, you might not be entirely out of luck. If you’re married, you may be entitled to a spousal Social Security retirement benefit. Generally, even non-working spouses can earn Social Security payouts if their spouse qualifies for their own benefits. Depending on how much your spouse earns in Social Security benefits, your own benefit may be quite significant, as spouses generally earn 50% of their spouse’s earnings. For example, if your spouse qualifies for a $3,000 monthly retirement benefit, your spousal benefit may be as high as $1,500, even if you never worked a day in your life.

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What may be more surprising is that even if you have divorced from your spouse, you may still be entitled to a Social Security benefit. If you were married to your former spouse for more than 10 years and you are not yet remarried, then you are still entitled to a spousal Social Security benefit in the same amount as if you were still married.

Check Out: The Average Social Security Check the Year You Were Born

4. Assess Your Other Retirement Savings

Whether or not you end up entitled to Social Security benefits, you likely have some supplemental retirement savings in the form of a 401(k) plan or IRA account. As early as you can before you retire, it’s a good idea to make a projection of where your retirement nest egg will be by the time you stop working. If it looks like you won’t qualify for Social Security and your retirement savings are coming up short, this is the time to maximize your contributions. After you reach age 50, the IRS allows you to contribute extra amounts to both 401(k) plans and IRA accounts. For 2021 and 2022, you can kick in an additional $6,500 to a 401(k) plan, SARSEP, 457 plan or 403(b) plan if you’re 50 or older. For IRA accounts, the additional allowable contribution is $1,000 for both tax years.

See: 17 Tips To Live Comfortably Off Just a Social Security Check

5. Consider Last-Ditch Alternatives

For some near-retirees, there is no easy path to a secure retirement. If you won’t be able to qualify for Social Security and your retirement savings are coming up short as well, you may have to take some more aggressive steps. In addition to working as long as possible at your current job, you might have to take on a side gig that extends into your retirement years. A side gig may bring in $1,000 per month or more, and that may make up a decent amount of your Social Security shortfall. 

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Other options to help make up for your lost Social Security are to move to a lower-cost area or, if available, to tap the equity in your home. Moving to a more economical location can save you hundreds or even thousands of dollars per month, and that can act as an ongoing monthly subsidy, much like Social Security. Tapping the equity in your home via a home equity loan or reverse mortgage can also provide you with supplemental funds, although you should talk with your financial advisor before making these types of moves.

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About the Author

After earning a B.A. in English with a Specialization in Business from UCLA, John Csiszar worked in the financial services industry as a registered representative for 18 years. Along the way, Csiszar earned both Certified Financial Planner and Registered Investment Adviser designations, in addition to being licensed as a life agent, while working for both a major Wall Street wirehouse and for his own investment advisory firm. During his time as an advisor, Csiszar managed over $100 million in client assets while providing individualized investment plans for hundreds of clients.
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