# Is it worth gaining the extra 4 credits of work?



## LukeO9 (Feb 12, 2016)

Hello Forum,
I had previously worked in the US for 9 years, thus accruing 36 credits of work. I understand that I need 40 credits to get retirement benefits, but I’m wondering if it is worth me returning to The States for a short period of work to gain the necessary credits. The US Social Security Administration (SSA) can't give me a benefit estimate because I haven't earned enough yet to qualify, and I don’t know how the benefits are determined, other than an average over one’s working lifetime. I’ve averaged $47,235 per annum taxed social security earnings over the 9 years of working in the US. Can anyone give me an approximate amount of retirement benefits I might expect to receive if I did eventually qualify?
Thanks in advance.


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## BBCWatcher (Dec 28, 2012)

Yes, you need 40 credits total, but the Social Security Administration can count your earnings history and contributions into treaty country social security systems. The United States currently has social security totalization agreements with the following countries: Italy, Germany, Switzerland, Belgium, Norway, Canada, the United Kingdom, Sweden, Spain, France, Portugal, the Netherlands, Austria, Finland, Ireland, Luxembourg, Greece, South Korea, Chile, Australia, Japan, Denmark, the Czech Republic, Poland, and the Slovak Republic. If you worked another year (or even less due to rounding effects) in any of those countries and contributed to that country's social insurance system, when it comes time to apply for your U.S. benefits just tell the SSA about that other work and you can qualify for a U.S. benefit. (You can also qualify for another country's or countries' benefits, but you have to tell SSA about that, too.)

I see you're from Australia, and Australia is one of the treaty countries. So you should be set to go to qualify for some level of U.S. Social Security retirement benefit (and spousal benefit if you have a same or opposite sex spouse, and when he/she reaches the right age).

You do need 40 U.S. credits -- only U.S. -- to qualify for free U.S. Medicare Part A when you reach age 65 if that's of interest (and for your spouse as well when he/she reaches age 65, with the added condition for him/her of minimum 5 years of U.S. residence if not a U.S. citizen).

Turning back to U.S. Social Security retirement benefits, note that you can apply to receive benefits as early as age 62 and as late as age 70. The longer you wait, the higher your monthly benefit. In general it's prudent to wait until age 70 if you can afford it and if you're in good health. Benefits don't increase past age 70, so don't wait any longer than that. Your spouse has slightly more complicated age requirements, and it's harder to generalize about when he/she should start collecting. I'll leave that topic for another day.

Yes, the spousal benefit is available even if your spouse never stepped foot in the United States and never contributed to the U.S. Social Security system. If you don't have a spouse, maybe you can "buy" one.  There are a few limitations on benefit payments depending on the citizenship of the recipient and/or the country where you want benefits paid. Don't try to get your and your spouse's benefits paid to a bank in Iran, for example -- that's not going to work, at least not unless U.S.-Iran relations improve a lot. You don't necessarily have to get your benefits paid into the same country where you live.

If you have zero contributions into other treaty countries I can run a benefit estimate if you like, assuming another 4 U.S. credits. With 36 credits plus treaty contributions it gets a lot more complicated. Typically the monthly benefit would be a bit lower than the 40 credit scenario, but it'll be quite close.


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## BBCWatcher (Dec 28, 2012)

....OK, following up, I ran an estimate of your future U.S. Social Security retirement benefit. Here are the assumptions I used:

Date of Birth: January 1, 1960
U.S. Earnings History: from 1998 to 2007 (inclusive) $47,235 per year; zero otherwise
Starting Age to Collect Retirement Benefits: 67

In that scenario your monthly retirement benefit would be $953 in current (2016) dollars. The spousal benefit is ordinarily half that amount. This figure does not include the Windfall Elimination Provision, if applicable.

Obviously (unless I was incredibly lucky) this scenario isn't exactly yours. But to help you understand how it works, if you shift that contribution period farther into the past, each dollar is/was more valuable, hence your monthly benefit would be higher than $953. Of course if you worked in the U.S. more recently (including any "top up" year) then the monthly benefit would decrease somewhat.

To answer your basic question: this is clearly a nontrivial amount of money to worry about. So if you can't qualify based on treaty country contributions (and you don't need much), then in my view this is an annuity stream well worth trying to grab if you can.


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## iota2014 (Jul 30, 2015)

LukeO9 said:


> Hello Forum,
> I had previously worked in the US for 9 years, thus accruing 36 credits of work. I understand that I need 40 credits to get retirement benefits, but I’m wondering if it is worth me returning to The States for a short period of work to gain the necessary credits. The US Social Security Administration (SSA) can't give me a benefit estimate because I haven't earned enough yet to qualify, and I don’t know how the benefits are determined, other than an average over one’s working lifetime. I’ve averaged $47,235 per annum taxed social security earnings over the 9 years of working in the US. Can anyone give me an approximate amount of retirement benefits I might expect to receive if I did eventually qualify?
> Thanks in advance.


Hi Luke09 -

As BBCWatcher says, you can use your 36 credits to claim a "Totalization" pension, assuming you also have work years credited to you under the Autralian system. See https://www.ssa.gov/international/Agreement_Pamphlets/austrlia.html to read the Agreement.

Note that if you were to return to the US to earn the extra 4 credits, you might end up with _less_ than you would be able to claim under the Totalization Agreement. If you receive or expect to receive Superannuation, or any other work-related benefit, your SSA pension would probably be reduced by the application of the Windfall Elimination Provision. Totalization benefits are not affected by the WEP. To get some idea of the difference it could make, use the SSA calculator, and then put the same numbers through the WEP version of the calculator (https://www.ssa.gov/planners/retire/anyPiaWepjs04.html)

I'm currently receiving a small SSA pension based on only 14 credits, thanks to the US-UK Totalization Agreement. Small, but it would be a lot smaller if WEP applied!


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## Bevdeforges (Nov 16, 2007)

With a totalization agreement, not only will your years in Australia be counted (but years/quarters only, not your earnings during those years), but your time worked in the US can also be counted toward your Australian pension (if needed). So, net-net, no need to work off the remaining 4 quarters in the US. 
Cheers,
Bev


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## LukeO9 (Feb 12, 2016)

Absolutely fantastic comprehensive replies. Thank you so much BBC.


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## LukeO9 (Feb 12, 2016)

Thanks iota. Do you also receive a UK pension?


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## iota2014 (Jul 30, 2015)

LukeO9 said:


> Thanks iota. Do you also receive a UK pension?


Yes, and my UK pension would trigger the WEP on my SSA pension if the SSA pension was based on a full 40-credits-or-more US working record. Because the SSA pension is a totalization benefit, the WEP does not apply.

See https://secure.ssa.gov/poms.nsf/lnx/0201701310#b


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## LukeO9 (Feb 12, 2016)

Brilliant info. Thanks all.


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## BBCWatcher (Dec 28, 2012)

Don't worry about the WEP to the exclusion of all other factors, though. It's a potential factor, but there are many other factors that are worth considering.

I would also note that on occasion you can "stumble into" your 10+ years of U.S. Social Security contributions even if you don't step foot in the United States. I'll use myself as an example. I get a trickle of U.S. earned income even though I don't live in the United States, and U.S. Social Security and Medicare contributions are withheld from that income. It's a big enough trickle that I often get my full four credits each year -- I did for 2015, which surprised me a bit. This happens because I have some "hangover" income that trickles in from a U.S. employer, and it is properly classified as earned income for these purposes. In particular, if you have just recently left a U.S. employer then you might experience the same phenomenon. SSA only a few days ago posted my 2015 earned income in my earnings history, available online. If you're seeing $0 for 2015 it's probably going to stay that way at this point in time since U.S. employers should have their W-2s all processed now.


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