Social security substantial earnings is a term coined by the Social Security Administration that is used when determining whether or not the amount of income made in a given year of employment qualifies as one of the up to 30 or more years of employment that can be used to calculate your social security benefit. Each year the minimum threshold of income goes up and is posted on the social security website on what can be a qualified income social security substantial earnings year. I’ve attached a social security administration document that shows past income earning thresholds on the current (2023) and prior years of what is considered as an acceptable social security substantial earnings year.
However, if you have worked or are working for an employer who does not contribute to social security, those income earning years do not qualify as a social security substantial earnings year. Very important that you know that and let others know as well. You would think the Social Security Administration would know this information, but they do not. You need to make sure and contact social security and let them know if you are to be receiving a pension or monthly income from any employer in which you are currently employed or have been in the past, at the earliest point possible prior to accepting social security benefits so your projected social security benefit can be recalculated. The years you received this income doesn’t contribute to your social security benefit. If you receive any of type of pension income from an employer that did not contribute to social security, while taking social security benefits unbeknownst to social security, soon or later they will catch it and you will have to pay back possibly a substantial portion of your received social security benefits along with penalties. You do not want to be in that situation.
You can download your earnings statement from the social security website and check which years of income employers contributed to social security reported. There are some employers who pay pensions and paid into social security, not too many of them but they exist or existed at one time. If this is the case then those years working for that employer, assuming you earned enough to meet the minimum threshold to meet a social security substantial earnings year, should be reporting on your social security projected benefit letter. If you are getting pension statements from prior employer(s) with asset balances sent to you, check to see if that year(s) are listed on your social security statement, more than likely those years are not reporting.
Social security substantial earnings are also used in the calculation of the WEP and GPO penalties, when the social security administration knows you are to be with receiving social security benefits while receiving a pension. When this happens, your monthly benefits are reduced, there is a sliding scale on this depending on how many social security substantial earnings years you have on record. This is called a non-covered pension if the employer didn’t contribute to social security. I have a different article on the WEP and GPO on my site, you can click on it and read.
Social security substantial earnings years can be confusing. There are many caveats and circumstances surrounding how this term is applied and it isn’t a one size fits all. Feel free to leave a message below with any questions or concerns. I have access to very knowledgeable and dependable resources to answer any social security question you may have. Save yourself time from staying on hold with the Social Security Administration for hours at a time or not having to make an in-person appointment, I am happy to help
Kind regards,
KW