Uniformed Service Credits: Don’t Get Too Excited

Uniformed Service Credits: Don’t Get Too Excited
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Recently, a number of members contacted us after hearing about uniformed service credits added to Social Security. It’s probably good time for an update. This topic pops up occasionally. These credits don't result in a major increase to your Social Security benefit like some seem to think. However, yes, these credits do add some income to your earning record.

As the result of a law implemented in the 1950s, Social Security adds extra earnings to the uniformed service pay record for those who had active duty service between 1957 and 2001. (Reservists started receiving the earnings credit for inactive service such as weekend drill time in 1988.) 

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If you served between 1957 and 1977, you'll get $300 in additional earnings each quarter you received active duty base pay. If you served between 1978 and 2001, you'll get $100 in additional earnings for every $300 in active duty base pay - up a maximum of $1,200 a year.

Credit for service from 1957 through 1967 will be added to your record when you apply for Social Security benefits. You don't need to do anything to receive credit for service from 1968 to 2001 because the credits are automatically added to your record. You can validate the entries by requesting a detailed earnings statement from Social Security.

The Social Security benefit is calculated using average indexed monthly earnings over the 35 years in which you earned the most. When you apply for Social Security retirement benefits, your service time earnings (base pay only), even with the extra credit, will be your lowest earnings, and at the tail-end of your 35 years.

When averaged out over 420 months, it's doubtful the extra credit will make much, if any, difference to your retirement benefit.

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About the Author

Lt. Col. Shane Ostrom, USAF (Ret), CFP®
Lt. Col. Shane Ostrom, USAF (Ret), CFP®

Ostrom is MOAA's former Program Director, Financial & Benefits Education/Counseling