Understanding what appears on your Social Security earnings record can help you better plan for the future. Your earnings history plays an important role in determining whether you qualify for Social Security benefits and how much you may receive in retirement.
It's important to note that not all money you earn is treated the same. While wages and self-employment net income are generally included in your Social Security earnings record, other types of income, like pensions, capital gains, and investment may not be. In this month’s blog, we break down what you need to know about key differences—and how to check records for accuracy—to help you understand your future benefits.
Which Types of Income Count?
Your Social Security earnings generally include wages from employment. These reported earnings are used by the Social Security Administration (SSA) to help determine both your eligibility for benefits and the amount you may receive.
Net earnings (after expenses) from self-employment can also count. If you are self-employed, you are generally responsible for reporting your income and calculating and paying self-employment tax, which covers your Social Security and Medicare taxes.
There is also an annual limit on the amount of earnings subject to Social Security tax and counted toward Social Security benefits. For 2026, the maximum amount of earnings subject to Social Security tax is $184,500.
What Income Doesn’t Count?
It is important to remember that not all income counts as Social Security earnings, even if they are taxable income. This can include:
Interest and dividends
Capital gains
Pension income
Rental income in many circumstances
Traditional IRA and 401(k) withdrawals
In other words, just because income appears on your tax return does not necessarily mean it will appear on your Social Security earnings record. Social Security earnings are generally tied to income earned through work that is covered by Social Security.
Why Your Earnings Record Matters
Your earnings record is used to help determine your future Social Security benefits. Generally, you need to earn 40 Social Security credits to qualify for retirement benefits. You can earn up to four credits per year, depending on your earnings.
The amount you receive is not based simply on how many credits you earn. The SSA generally averages your highest 35 years of earnings into an Average Indexed Monthly Earnings (AIME) amount, and applies a progressive formula using "bend points" to find your baseline monthly benefit.
Here is a simplified look at how that calculation works:
Your past wages are adjusted to account for changes in average national wage levels over your lifetime.
When calculating your benefits, the SSA selects your 35 highest-earning years. If you have fewer than 35 years of earnings, the remaining years are counted as $0, which can lower your average. Similarly, a year in which you have a net loss from self-employment or less than $400 in net self-employment earnings may be reflected as $0.
Total earnings for those 35 years are divided by 420 (the total number of months in 35 years) to establish your AIME.
The SSA then applies a progressive formula on your AIME using specific percentages (90%, 32%, and 15%) split by yearly adjusted "bend points" to determine your base payment. Lower-income earners get a higher replacement rate of their past earnings.
This means that keeping an accurate record of your earnings throughout your working life can be important—especially if you have worked for many employers or have been self-employed.
Checking for Errors
It is a good idea to review your Social Security earnings record periodically. Missing or incorrect earnings could potentially affect your future benefits.
If you spot an error, make sure you have important documents on hand such as:
W-2 forms
Tax returns
Pay stubs or other wage records
Self-employment records
You can review your earnings history and see personalized benefit estimates by signing in to your account through the Social Security Administration. If you find an error, the SSA can provide guidance on the steps needed to correct your record.
Planning for the Future
Keeping track of your Social Security earnings is one simple way to better understand what your future benefits may look like. Knowing which types of income count, reviewing your earnings record for accuracy, and understanding how your benefits are generally calculated can help you make more informed decisions as you plan for retirement.
If you have questions about your personal earnings, taxes, or retirement planning, the team at Angolano & Company is here to help. Reach out today to learn more about how your income and financial decisions may affect your future.