Page Reviewed / Updated – September 28nd, 2021

The Social Security Minimum Benefit is an alternative method of calculating benefits that can sometimes offer a bigger monthly payment than the traditional calculation. The idea behind the special minimum benefit is that it helps low-income participants with some work history receive higher benefits.

There are tens of millions of retirees claiming Social Security, but the basic retirement benefit is not usually enough to keep people above the poverty line. The special minimum benefit rules were enacted in 1972 as a way of ensuring long-term low-income individuals receive enough to live on. This benefit could be particularly useful for seniors who are struggling with the costs of assisted living.

The Special Minimum Benefit Is Automatically Awarded

There are two formulas for calculating Social Security entitlement. One is based on a person’s lifetime earnings and the other on the number of years the person has had earnings at or above the minimum threshold.

When a person applies for Social Security, their entitlement is calculated with both formulas. The applicant will be paid benefits based on whichever scheme gives them the highest entitlement. As of 2020, the special minimum payment was $886 per month.

Most People Receive Higher Benefits Than the Standard Calculation

It’s rare for someone to be better off under the special minimum payment scheme. In 2019, there were 64 million people in receipt of Social Security benefits, but only 32,092 were eligible for the minimum benefit. The special minimum payment has been steadily increased to take into account inflation, but the nature of the formula means new applicants to Social Security are unlikely to qualify for the minimum benefit.

Some lawmakers are considering proposals to change the formula, either reducing the earnings requirements or boosting the benefit amounts to allow more individuals to qualify. Elderly claimants, in particular, would stand to benefit from changes to the system.

If you’re considering claiming Social Security and are at or close to full retirement age, you can explore your options with a benefits advisor at a local senior center or making use of the financial advice offered by many assisted living facilities. That way, you know exactly what you’re eligible for and have a better understanding of the application process.