Social Security special minimum benefit: What it is and how much it pays

The Social Security Administration offers a variety of benefits to retirees, survivors and people with disabilities. One lesser-known benefit is the Social Security special minimum benefit, designed specifically for individuals with a long history of low earnings.

By understanding the Social Security special minimum benefit, lower-income earners can make informed decisions about their retirement income and prepare for a more secure future.

This article dives into the details of the special minimum benefit program, explaining its purpose, eligibility requirements and how it compares to the standard Social Security retirement benefit.

Here’s everything you need to know.

What is the Social Security special minimum benefit?

The Social Security special minimum benefit is a monthly payment based on a formula that considers the number of years an individual worked and had Social Security taxes withheld from their earnings. It was established in 1972 to ensure that long-term, low-wage workers receive an adequate retirement benefit, potentially larger than the standard formula might provide.

The minimum benefit starts at $49.40 per month in 2023 and $50.90 in 2024, requiring at least 11 years of work history. The maximum benefit, for those with 30 years of work, increased from $1,033.50 in 2023 to $1,066.50 in 2024.

If you think you might qualify for the special minimum benefit, it’s wise to explore ways to maximize your work credits and make sure your Social Security earnings records are accurate.

Who qualifies for the Social Security special minimum benefit?

To qualify, you need at least 11 years of work with earnings reaching a minimum threshold. This threshold is $17,820 for 2023 and increased to $18,765 in 2024.

The benefit reaches its maximum after 30 years of work, providing the full special minimum amount.

While you can start receiving Social Security benefits as early as age 62, it’s important to be aware of the impact on your monthly amount.

Filing for benefits before reaching your full retirement age, which is 67 for people born after 1960 (and slightly earlier for those born before), will result in a permanent reduction in your benefit amount.

To receive the full benefit amount you earned, you’ll need to wait until you reach your full retirement age.

How to calculate the Social Security special minimum benefit

The Social Security Administration uses a complex formula to calculate the special minimum benefit based on your work history. The formula considers the number of years of coverage you have earned and a special minimum primary insurance amount (PIA) table. This table assigns a PIA value to each year of coverage.

There’s a tool offered by the Social Security Administration that allows you to look up the special minimum PIA table for different years. Or consult with a Social Security representative.

Special minimum benefit vs. Social Security retirement benefits

The standard Social Security retirement benefit is based on your average indexed earnings throughout your working career. For most people, the standard benefit will be higher than the special minimum benefit. However, the special minimum benefit can be higher for those with a long history of low earnings.

At retirement, you will automatically receive the higher amount between your standard benefit and the special minimum benefit — not both.

The special minimum benefit’s importance has diminished over time as wages have increased. According to the Social Security Administration, the number of beneficiaries relying on the special minimum benefit has significantly decreased, dropping from around 200,000 in the early 1990s to about 32,100 in 2019.

Fewer people qualify each year because wages — how regular Social Security is calculated — grow faster than prices, which is what the special benefit uses.

“Projections indicate that only under very limited circumstances will one be able to benefit from the special minimum now and in the future,” noted an April 2021 report from the Social Security Administration.

The Social Security system can be complex. Consider consulting with a Social Security representative or a financial advisor specializing in retirement planning to understand your eligibility and potential benefits.

Bottom line

The Social Security special minimum benefit is a valuable program that ensures a minimum level of income for retirees with a long history of low earnings. While the standard Social Security retirement benefit is much more common and will likely be higher for most people, the special minimum benefit provides a crucial safety net for those who qualify.