Lesson P202.6 · Personal Finance 202: Lead Your Family
Social Security and Medicare: what you've earned
4-minute read · Figures for tax year 2026
Photo: Oliver Morgan Media / Pexels, Pexels License
The short answer
It depends on your own earnings record. Social Security figures your retirement benefit from your highest 35 years of earnings, so every year of reported pay counts. Open a my Social Security account to see your estimate, and check every year that your earnings are all there. Cash or 1099 income you don't report earns no credits and adds nothing to your benefit.
How you earn it: credits and your record
For 2026, you earn one credit for each $1,890 of reported earnings, up to 4 credits a year. Retirement benefits take 40 credits, which is about 10 years of work. Disability and survivor benefits depend on your credits too, and disability needs recent ones.
Your benefit amount comes from your highest 35 years of earnings, adjusted for wage growth over time. A year with nothing reported is a year that adds nothing.
If you work for yourself, the earnings count only when you report them. You report them when you file your federal return. If your net earnings are $400 or more, you file Schedule SE and pay self-employment tax, even if you owe no income tax. For 2026, net earnings of $7,560 or more earn the full 4 credits.
Example (made-up numbers). Devon nets $20,000 a year from his own driveway business, mostly paid in cash.
| Reports it | Doesn't report it | |
|---|---|---|
| Self-employment tax | Paid with his return | None |
| Earnings on his Social Security record | Counted | $0 |
| Credits each year | 4 | 0 |
| After 10 years | 40 credits, enough for retirement benefits | 0 credits |
Reporting costs Devon self-employment tax every year (P101.2). Not reporting costs him the credits, the years toward his benefit and the disability and survivor protection that comes with a work record.
When to claim: 62, 67 or 70
- Early. You can start as early as 62, with a smaller check. Social Security's own example: with a full retirement age of 67, a $1,000 benefit becomes $700 at 62, a 30% cut.
- Full retirement age. It's 67 for anyone born in 1960 or later.
- Later. Each year you wait past full retirement age adds 8%, up to age 70. By our math, the same $1,000 at 67 would be $1,240 at 70.
There's no single right age. Your health, your savings, your spouse and how your body is holding up all count. Physical work can make 67 feel a long way off. Look at your estimates for each age before you decide.
Disability, survivors and Medicare
- Disability. Pays if you can't work because of a medical condition expected to last at least a year or to end in death. There's generally a five-month wait. You also need recent work: from age 31 on, generally 5 years of work out of the last 10.
- Survivors. If a worker dies, a surviving spouse can get reduced benefits as early as 60, or at any age while caring for the worker's child under 16. Unmarried children under 18 (19 if still in high school full time) can get benefits too.
- Medicare. Your first chance to sign up is a 7-month window: the 3 months before the month you turn 65, that month and the 3 months after. If you already get Social Security, you're enrolled automatically. Sign up late for Part B without other qualifying coverage, such as a current job's plan, and you may pay a penalty for as long as you have Part B.
Your Move
Do this week
- Open or log in to your my Social Security account.
- Check last year's earnings against your W-2s and tax return.
- Fix anything wrong now: request a correction online or call 1-800-772-1213, with your W-2s, pay stubs or tax return in hand.
- Write down your estimates at 62, 67 and 70.
Log it: Checked my Social Security record.
Common questions
How much Social Security will I get?
It depends on your earnings record. Your Statement in my Social Security shows estimates at different ages.
I'm paid in cash. Does it count?
Only if it's reported. If you work for yourself, you report it on your return with Schedule SE and pay self-employment tax. That's what puts it on your record.
How long do I have to fix a mistake on my record?
Generally 3 years, 3 months and 15 days after the end of the tax year, with some exceptions. That's why it pays to check every year.
Watch out for
- Cash you don't report. It skips taxes now and costs you credits, benefits and protection later.
- Missing years you never checked. Old mistakes get harder to fix.
- Missing your Medicare window. A Part B penalty can last as long as you have Part B.
Free help
- my Social Security: your Statement, earnings record and estimates
- Social Security: 1-800-772-1213
- Social Security booklets: If You Are Self-Employed, Disability Benefits, Survivors Benefits, Medicare
Free practice
Lesson check
5 questions on this lesson, one at a time, with the answer and the reason after each. Pass with 4 right, including every must-know question.
This is general education, not tax, legal, investment or insurance advice. Rules change and every situation is different. Check the sources below, and talk to a qualified professional before you act on it.
Sources
- Social Security: Quarter of coverage, 2026
- Social Security: How you earn credits
- Social Security: If You Are Self-Employed
- Social Security: Your Retirement Benefit: How It's Determined
- Social Security: Retirement age and benefit reduction
- Social Security: Delayed retirement credits
- Social Security: Retirement Benefits
- Social Security: Disability Benefits
- Social Security: Survivors Benefits
- Social Security: Medicare
- Social Security: How do I correct my earnings record?
- Social Security: my Social Security