There are three requirements for an individual to be eligible to receive old age Social Security benefits. First, the individual must have attained the age of 62. Second, the individual must file an application for old age benefits. Third, the application must demonstrate that the individual is “fully insured.” The extent to which an individual is insured depends on the number of quarters of coverage credited to his or her Social Security earnings record. 20 CFR section 404.101(a). A quarter is a three-month period ending March 31, June 30, September 30, or December 31. A worker becomes “fully insured” when the individual has been credited with working the requisite number of quarters. 42 U.S.C.A. section 414(a). The Social Security Administration’s regulations contain a table specifying by birth date the quarters of coverage required to obtain fully insured status. 20 CFR § 404.115. But irrespective of birth date, any worker who has 40 quarters (i.e., 10 years) of coverage is fully insured.
Workers born before 1950 can retire at age 65 with full benefits based on their average income during their working years. For workers born between 1950 and 1960, the retirement age for full benefits has increased to age 66. Workers born in 1960 or later will not receive full retirement benefits until age 67. However, any worker, regardless of birth date, may retire at age 62 and receive less than full benefits. At age 65, a worker’s spouse who has not contributed to Social Security receives 50 percent of the amount paid to the worker.
Workers who continue to work past retirement age may lose some benefits because Social Security is designed to replace lost earnings. If earnings from employment do not exceed the specified amount exempted by law, persons working past the age of retirement will receive full benefits. If earnings are greater than the exempt amount, one dollar of benefit is withheld for every two dollars in wages earned above that amount. Once a worker reaches age 70, however, he or she no longer has to report earnings to SSA, and thus his or her Social Security benefits will cease to be reduced.
Since 1975 Social Security benefits have increased annually to offset inflation. Known as cost of living adjustments (COLAs), these increases are based on the annual increase in consumer prices as reflected by the consumer price index (CPI). Allowing benefits to increase automatically eliminated the need for Congress to pass special acts each year to address the issue. However, critics complain that COLAs are responsible for unnecessarily driving up the costs of Social Security. They contend that the CPI overestimates current rates of inflation, and, as a result, Social Security benefits are overadjusted upward.