I worked for 28 years under Social Security. I was fired at age 52, and have not worked in over 10 years. If I go back to work now, after have no Social Security credits for over 10 years and take a job at less than half my former pay, I was told my Social Security retirement benefits would be permanently reduced and it is better to have no credits on your record than take a job at half your former pay. Is this correct? Is there a formula or calculator to use to determine how benefits are reduced by taking a job at less than half your former pay rate that would help you decide if it is even worthwhile?
No, that's not correct. You can't reduce your Social Security benefit rate by working, regardless of how little you earn.
Social Security retirement benefits are based on an average of a person's highest 35 years of wage indexed earnings (https://www.ssa.gov/pubs/EN-05-10070.pdf). If you have less that 35 years of earnings, zero years are used in the average, which of course lowers your average and your resulting benefit rate. Therefore, returning to work could only increase your benefit rate or not have any effect if you already have 35 years with higher wage indexed earnings.
Our maximization software has an accurate benefit calculator that uses the same computation formula used by Social Security. The software allows you to enter future years of projected earnings in order to determine what effect they would have on your benefit rate.