Nearly 2.7 Million Seniors Will Never Receive a Social Security Benefit — Here’s Why

In May, close to 67 million people received a traditional Social Security benefit, including more than 49 million retired workers. Decades of annual surveys have shown that up to 90% of these retired workers lean on their monthly payout, to some degree, to cover their expenses. In other words, Social Security is providing a financial foundation for tens of millions of seniors each year.

However, not everyone qualifies for America’s top retirement program. Nearly 2.7 million seniors aged 60 and over will never receive a Social Security benefit.

Most Americans earn their Social Security retirement benefit the common way

The vast majority of Americans will earn their way into a retirement benefit because of their work history. That’s right — you’re not entitled to a Social Security retired-worker payout just because you were born in the U.S. or became a U.S. citizen at a later date.

The way most workers qualify for a Social Security check during their golden years is by earning 40 lifetime work credits. In 2023, a quarter of coverage (one credit) equates to $1,640 in earned income (i.e., wages and salary but not investment income), and the maximum number of credits that can be earned in any given year is four.  Ergo, workers can maximize their work credits in 2023 with $6,560 (4 X $1,640) in earned income. All things considered, the bar to receive a Social Security payout is set reasonably low and allows even part-time workers to qualify for a benefit.

While full-and-part-time workers netting 40 lifetime work credits accounts for the bulk of traditional beneficiaries, there are a couple of exceptions. For example, workers with long-term disabilities can qualify for benefits even if they haven’t reached the requisite 40 work-credit mark. A scaled age-to-credits table is used to determine if a worker qualifies for a disability payout.

Likewise, there are situations where a person with no work history at all can qualify for a Social Security check. For instance, if a spouse, who was the sole earner throughout their lifetime, were to pass away before their partner, this partner, who hasn’t worked, and therefore hasn’t qualified for a Social Security benefit the traditional way, may qualify for a survivor benefit.

There are about 2.7 million Social Security “never beneficiaries”

For 96.5% of the roughly 76.9 million people the U.S. Census Bureau shows are aged 60 and older (as of 2021), some sort of Social Security benefit or protection awaits. For the remaining 3.5%, which equates to about 2.7 million seniors, there’ll be no Social Security check in their future. These “never beneficiaries,” as the Social Security Administration (SSA) refers to them, fall into four categories.

1. Late-arriving immigrants: Legal immigration into the U.S. is absolutely necessary for the health of Social Security. Most immigrants coming into the U.S. tend to be younger, which means they spend decades in the labor force contributing money to the program via the payroll tax on earned income. However, late-arriving immigrants (defied as age 50 and up by the SSA) may not have the time necessary to earn the 40 lifetime work credits needed to qualify for a Social Security retirement benefit. Late-arriving immigrants account for 45.8% of all never beneficiaries, per the SSA.
2. Infrequent workers: Although the bar to qualify for benefits is set relatively low for full- and part-time workers, not everyone is going to work enough, or perhaps earn enough, to reach the requisite 40 work credits needed to receive a retirement benefit. According to the SSA, 39.6% of all never beneficiaries are Americans who didn’t have sufficient work/earnings history to qualify for a benefit, but aren’t late-arriving immigrants.
3. Non-covered workers: The third category of never beneficiaries is non-covered workers, which is primarily composed of select state and local government workers. Some of these employees have public pension coverage and, therefore, won’t receive a Social Security payout. The SSA notes that non-covered workers account for 13.4% of never beneficiaries.
4. Die before receiving benefits: The fourth (and smallest) group of never beneficiaries involves seniors aged 60 and over who’ll pass away before receiving a payout. Eligible workers can claim their Social Security retirement benefit as early as age 62, although the program incents patience. Waiting allows a workers’ monthly retirement benefit to grow by as much as 8% per year and has, historically, proved to be a smarter choice for those looking to maximize their lifetime payout from the program. Beneficiaries who pass away before claiming benefits account for 1.2% of the nearly 2.7 million never beneficiaries.

The SSA also notes vast differences in poverty rates between these four never-beneficiary categories. Thanks to the pensions they receive from state and local governments, fewer than 9% of non-covered workers are below the poverty line. The same goes for workers who passed away before receiving benefits (8.1% poverty rate).

Meanwhile, two-thirds (67.2%) of infrequent workers and 57.3% of late-arriving immigrants were living in poverty, as of August 2021. While this relatively small percentage of seniors is, undoubtedly, facing some financial hardships, understand that America’s most successful retirement program has laid some form of financial foundation beneath the feet of the other 74.2 million Americans aged 60 and over that it covers.