Does Social Security Still Have a Minimum Benefit?

The answer is technically yes -- but there's a catch.

Dan Caplinger
Dan Caplinger
Mar 3, 2019 at 7:07PM
Investment Planning

Social Security helps tens of millions of retirees get income after the end of their careers, and the program's beneficial impact on poverty rates among the elderly has been noteworthy. By itself, the average monthly retirement benefit of around $1,400 is enough to keep income above the poverty level for a single retiree, and it comes just shy of the poverty level for a household with two people. Given how a large percentage of Social Security recipients rely on the benefits the program provides for the vast majority of their total income, Social Security's impact continues to be vital in fighting poverty.

However, not everyone gets that $1,400 average monthly benefit, and some believe that the federal government can do more to ensure that everyone stays out of poverty in retirement. Much of that discussion centers on Social Security's minimum benefit provision -- a feature that has lost almost all of its power over the years but that could make a comeback if some lawmakers have their way.

Two Social Security cards on top of a $100 bill.

Image source: Getty Images.

The basics of Social Security's minimum benefit

Social Security's special minimum benefit offers an alternative way for recipients to calculate their benefits. The idea is to offer a higher number to certain low-income participants than the traditional benefit formula would produce, resulting in bigger monthly checks.

A worker has to have at least 11 years of earnings to qualify for the special minimum benefit, with a minimum amount earned each year. That minimum gets changed every year based on inflation. For 2019, a person would have to earn at least $14,805 to get credit for the year for special minimum benefit purposes.

If you have a long enough work history, then you're entitled to minimum benefits under Social Security. The longer you've worked, the higher your minimum benefit will be, as this table of benefits for 2019 shows.

Years of Coverage

Minimum Benefit at Full Retirement Age

11

$41.90

12

$85.60

13

$129.40

14

$173

15

$216.30

16

$260.30

17

$304

18

$347.70

19

$391.40

20

$435.30

21

$479

22

$522.40

23

$566.90

24

$610.50

25

$653.80

26

$698.30

27

$741.40

28

$785.10

29

$828.90

30 or more

$872.50

Data source: Social Security Administration.

As with regular benefits, the special minimum benefit is based on taking payments at full retirement age. Claim earlier, and the amount of those payments can get reduced.

Why just about no one gets Social Security's minimum benefit

The idea behind the minimum benefit was to give low-earning workers a chance to get a bigger benefit than they'd receive under ordinary Social Security rules. However, the way the rules covering both special and regular benefits have evolved over the years has made the minimum benefit provisions toothless.

In particular, using price-based inflation measures rather than those based on wages has made the minimum benefit lag behind ordinary Social Security. As a result, fewer than 50,000 people received the minimum benefit in the most recent year for which data is available, down by two-thirds over the past 20 years. Moreover, Social Security has said that starting in 2018, the formula was such that there'd be no new recipients of the minimum benefit.


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Will minimum benefits come back?

Because elderly poverty remains a problem, some lawmakers have looked at ways to reinvigorate the minimum benefit provisions. Proposals have included the following:

  • Reducing the earnings needed to get a year's worth of credit for minimum benefit qualification purposes.
  • Boosting the full benefit amount, which is what determines the monthly figures in the preceding table.
  • Using wage-based inflation measures to calculate benefits.

It's uncertain how much support there is for minimum benefit reform, especially given the current fight more broadly about whether to expand or rein in the overall Social Security program. Yet without action, the only people receiving Social Security's special minimum benefit will be those who qualified in past years -- potentially leaving a new generation of retirees facing the challenges of poverty.