military earnings credit
August 23, 2019 | by Chris Stein, CFP®, Finance Instructor at Colorado State University
Military Earnings Credit

When you're done reading, be sure to listen to our audio blog below!

This week, a question from a retired U.S. Marine who wants clarification on a Social Security earnings credit for military members:

I retired from the USMC in 2002. I recently ran across an old email in our financial files, dated 2001. It was about a potential increase in Social Security retirement benefits specifically for veterans. I’m not sure of the email’s accuracy or validity, but would like your take on any such benefits that might have dated from that time. Is there such a thing, and what has to be done to get the benefit?

Special Extra Earnings Credit for Military Service

The benefit you are referring to is called “Special Extra Earnings for Military Service.” For more information, you can Google that exact phrase and a link pops up to a page on the Social Security website in its “Benefits Planner: Retirement” section.

Since 1957, if you had military service earnings for active duty – including any active duty for training – you would have paid Social Security taxes on those earnings. Since 1988, Social Security also covered any inactive duty service in the Armed Forces reserves.

From the email you found, you are asking about some special extra earnings for military service under certain circumstances – from 1957 through 2001 – that can be credited to your record for Social Security purposes. Such extra earnings credits could help qualify you for Social Security or raise the amount of your Social Security benefit.

However, those special earnings credits were granted for periods of active duty or active duty for training, but not for inactive duty training.

One more condition exists for being credited with special extra earnings: if your enlistment was after September 7, 1980, and you completed less than 24 months of active duty or a full tour, those additional earnings credits may not be available. You would have to check with Social Security.

How Credits Are Added

If and how those credits are added is broken into three ‘categories,’ or bands of years in which your active military service occurred:

From 1957 through 1967, they will add the extra credits to your record when you apply for Social Security benefits, but it will have to be done manually.

From 1968 through 2001, you don’t have to do anything to receive the extra credits, as they were automatically added to your record. They actually went back with their own software, for any active duty between 1968 and 2001, and updated the Social Security records.

After 2001, starting in the calendar year 2002, the rule went away, and there were no more credits for Special Extra Earnings for Military Service.

Because we don’t know how many years you served in the USMC, we don’t know which of those categories would affect you. However, the email from 2001 didn’t indicate that Social Security has now figured out how to give veterans some of the credits automatically, so you figured you had to ask for them. (And, if you served before 1968 – which is unlikely – that would be your case.)

How Credits Were Calculated

Essentially the way it worked was that, for service between 1957 and 1977, each quarter they added an extra $300 in earnings to your basic pay according to your Social Security record. They didn’t send you $300, but they added it to your Social Security earnings record as if you had earned it, possibly bolstering your Social Security benefit in the future.

For service between 1978 and 2001, for every $300 in active duty basic pay, they added an extra $100 in earnings, up to a maximum of $1,200 per year, to your Social Security record. (They didn’t change the amounts credited; they just changed how they applied the same $1,200 they had credited between 1957 and 1977.)

So, to answer your question: yes, there is such a thing as a Social Security earnings credit for military members that can increase retirement benefits for those who served active duty from 1957 through 2001. But, unless you have service before 1968, there’s nothing you need to do. It’s been added automatically to your Social Security record already.

Listen for More Information

For more information you can listen to the attached audio clip from the Retirement and IRA Show episode where we (Jim Saulnier and I) discuss this question.

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