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Our Guide to Social Security and Its Importance in Retirement

No matter where you’re employed, Social Security is a crucial part of your retirement income equation, especially when you’re a federal employee. It is one of the three payments that will constitute your retirement income, along with your thrift savings plan and your annuity, while having the benefit of being guaranteed for life.

For this reason, understanding how Social Security works and the best ways to make the most out of it will help you secure a stable retirement income and protect it while living life after work. By optimizing your Social Security, you’ll have to worry less about supporting yourself. Here’s what you need to know:

Social Security Eligibility

You will have to meet three essential qualifications to be eligible to receive Social Security benefits. Most people require 40 credits or ten years of wages subject to Social Security payroll taxes. The credits are cumulative and not necessarily consecutive. The credits will remain on your Social Security record without the risk of expiration.

Since you can earn only up to four credits a year, it will take you ten years to earn 40 credits. How many credits you earn is based on your income for that year. Although four credits are the limit per year, your income may earn you four credits as soon as a month.

Earning Social Security Credit

The social Security Administration adjusts the qualifications for receiving a Social Security credit based on the amount of money you need to earn. For 2021, the earnings required are $1,470, which is up by $50 compared to the previous year. If you make at least $5,880 in 2021, you’ll reach four credits in one year.

The Required Number of Social Security Credits for Benefits

Various Social Security benefits have different claims, requiring a certain number of credits. If you’re looking at retirement benefits, you must have 40 credits accrued from your work history, equating to 10 years of work for most people who earn four credits for each working year.

If you’re hoping to receive disability benefits, the number of credits you require depends on your age. Forty credits are enough for you to qualify, no matter the age. If you’re younger than 24, you need six credits over the previous three years. If you’re between 24 and 31, you need two credits per year since turning 21 years old. If you’re between 31 and 42 years old, you need only 20 credits. For every two years after the age of 42, you need two more credits beyond 20. 

Drawing Social Security

The earliest time you can draw Social Security is when you reach 62 years of age, although there is an exception for widows and widowers who can draw Social Security at age 60. Meanwhile, if you draw Social Security at 62 and you have not yet reached your full retirement age or FRA, identified by the year of your birth, your benefit may see a reduction of up to 30 percent. 

On the other hand, if you draw Social Security at your FRA, around 65 to 67 for most federal employees, you are entitled to receive your full Social Security benefit. If you choose to delay drawing Social Security, you will increase your Social Security benefit, although deferral increases cease at age 70. Delaying your Social Security drawing will have you maximize your benefits and give you the largest monthly benefit. 

Determining the Amount of Your Social Security

The amount of your Social Security retirement benefit depends on the earnings that were taxed. Higher-income means bigger benefits up to a certain point. It’s important to note that the amount you will receive also depends on other factors, like the age when you started drawing Social Security. 

The most anyone can receive per month when filing a claim for Social Security benefits in 2021 is $3,895 for someone who files at age 70, $3,148 for someone who files at the normal retirement age, and $2,324 for someone who files at age 62.


It is extra important to pay attention to your retirement income since your Social Security impacts how much you will receive as a federal employee. By understanding how it works, you can optimize it to obtain as much benefit as possible.

My Federal Plan offers free consulting and retirement planning for federal employees, helping each client plan for a comfortable retirement. Our network of agents and financial advisors works with public sector employees to create a tailored retirement plan to avoid future financial challenges. Book a consultation with us today!

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