Is Social Security Based on the Last 3 Years of Work?

What Is the Social Security Administration?

The Social Security Administration (SSA) is an independent government agency that administers social security. It is an insurance program that consists of retirement, disability and survivor benefits. In order to qualify for these benefits most workers pay into the system through social security taxes.

The head offices of the social security agency are located in Woodlawn, Maryland and are referred to as the Central Office. There are tens of thousands of workers employed by the social security agency and it is the largest government program in the United States.

It is estimated that by the end of the 2022 fiscal year the agency will have paid out $1.2 trillion in benefits to 66 million citizens and legal residents of the United States. An additional $61 billion is expected in SSI benefits and $7.5 million to low-income individuals.

This government agency is a vital part of the country's economy and without it millions of already struggling Americans would have nothing. It is a program that many have paid into for decades in preparation for retirement and as an insurance policy against sudden disability.

History of the Social Security Agency

On August 14th 1935, President Franklin D. Roosevelt signed the Social Security Act into law as part of his New Deal initiative. This led to the creation of the Social Security Board (SSB), a presidentially appointed group of three executives tasked with overseeing the social security program.

With zero budget, staff or even furniture the SSB finally obtained funding from the Federal Emergency Relief Administration. It was on October 14th 1936 that the first social security office opened its doors in Austin, Texas.

In January of 1937 social security taxes were first collected. Just a few years later the first social security check was issued to Ida Mary Fuller of Battleboro, Vermont. Ida’s check was dated January 31st 1940 and she received $22.54.

The SSB in 1939 merged with the U.S. Public Health Service, the Civilian Conservation Corp and other government agencies to become the Federal Security Agency. In 1846 under President Harry S. Truman the SSB was named the Social Security Administration SSA.

In 1953 the Federal Security Agency was dismantled and the SSA was placed under the banner of the Department of Health, Education and Welfare. Finally in 1994 President Bill Clinton made the Social Security Administration an independent body once again.

How Is Social Security Disability Insurance (SSDI) Calculated?

A very important aspect of social security is the SSDI program which covers individuals who have become disabled and are no longer able to earn a gainful living due to their challenges. The amount of benefits that a person might be eligible for are not dependent upon the type of disability but are instead based on the previous earnings and tax contributions made by the individual.

This is not like retirement but in terms of calculation it does have a similar calculation to determine how much a person may be eligible for. The time frame of income that SSDI takes into account when calculating a potential SSDI payment depends upon at what age a person becomes disabled.

Essentially the Social Security Administration counts up the years between when the applicant turned 22 to the first full year prior to them becoming unable to work. They then drop out between one to five years depending on how long that work history is. The final number of years are then considered the highest earning years for the individual and are taken into account for determining the SSDI payment amount.

How Is Retirement Social Security Calculated?

Generally speaking a person must amass 40 credits to apply for a full pension upon retirement and on average this may take up to 10 years of taxed income. In terms of determining the amount the highest 35 years of a person's income are used to calculate this. As an example if a person made more in the first 35 years of employment than their last 5 years then it would be the higher earning years that are factored not the last 5.

Qualifying for SSI

The SSI program was created essentially to help all those who would not qualify for the Social Security Disability Insurance scheme. This means that generally speaking it is far easier to qualify for SSI payments.

Those with qualifying disabilities and or their carers who can prove they are on a low income may well be eligible for this program. Unlike SSDI you do not need a significant work history and to have paid significantly into Social Security tax.

To qualify for SSDI the individual would have to have at least ten years of taxable income to be eligible for disability insurance payments. Those looking to qualify for SSI need no such work record. They simply need to be unable to work due to disability and fall within the federal poverty guidelines.

You do have to prove your low income status as this is a program that has been abused in the past. You might still get SSI even if you earn over the income requirements as the difference will be subtracted from the payment you receive.

All applications are taken on a case by case basis so there is no guarantee you will be accepted for this benefit. The only way to be sure is to make an application and submit all the relevant documents to prove your case.

What Is the 3 Year Rule?

As you have probably realized from the earlier sections of this article social security is not usually based on your last 3 years of work so where does this question come from? Well it actually comes from SSDI eligibility and is specific to certain circumstances.

As part of the process of claiming disability benefits from social security disability insurance you have to pass a recent work test and a duration work test. These essentially assess the social security credits you need to have accrued to cover you for SSDI benefits.

So what is the three year rule? Well this applies to individuals who become disabled and no longer able to work between the ages of 24 – 31 years old. The three years rule equates to the 12 social security credits you must amass during this time which generally takes at least 3 years.

If you become disabled before 24 years old you only need 6 credits to qualify which must have been accrued in the three years prior to the event that caused the permanent disability. Once you reach 31 years old you need to have amassed at least 20 social security credits to qualify. These will have to have accrued over the previous 10 years of the individual's working life.

Age of Disability Developing Average Years of Work Completed to Qualify
28 years of age or Younger 1.5 years
30 Years of Age 2 years
34 Years of Age 3 years
38 Years of Age 4 years
42 Years of Age 5 years
44 Years of Age 5.5 years
46 Years of Age 6 years
48 Years of Age 6.5 years
50 Years of Age 7 years
52 Years of Age 7.5 years
54 Years of Age 8 years
56 Years of Age 8.5 years
58 Years of Age 9 years
60 Years of Age 9.5 years

Final Thoughts

Generally speaking most social security is not based on your last three years of work. Retirement benefits for example require 40 credits to be accrued and this generally takes at least 10 years. You can get disability insurance from social security with just 3 years of accrued credits which amount to 12 but this usually applies to individuals who became permanently unable to work between the ages of 24 – 31.

Reference SSA Locator

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  • "Is Social Security Based on the Last 3 Years of Work?". SSA Locator. Accessed on April 23, 2024. https://ssalocator.com/blog/is-social-security-based-on-the-last-3-years-of-work/.

  • "Is Social Security Based on the Last 3 Years of Work?". SSA Locator, https://ssalocator.com/blog/is-social-security-based-on-the-last-3-years-of-work/. Accessed 23 April, 2024

  • Is Social Security Based on the Last 3 Years of Work?. SSA Locator. Retrieved from https://ssalocator.com/blog/is-social-security-based-on-the-last-3-years-of-work/.