The 2 Keys to Social Security Benefits
Your benefits are
• Average earnings
in your 35 topearning years
• The SSA’s formula
Figuring Your Top-Earning Years
You have to adjust early-career years for inflation.
• Index factors are provided by SSA and are based
on average wages in each year.
• Example: Compared to earnings in 2013,
earnings in 1991 are worth more than double.
Earnings in 1963 are worth 10 times as much.
• Once you adjust by factors, take the 35 best
years and add up the indexed earnings. Divide
by 420 to get a monthly earnings amount.
Figure Your Primary Insurance Amount
Take monthly earnings amount. Apply “bend
points” for PIA formula. For those turning 62 in
2014, formula is:
• 90% of the first $816 in monthly earnings.
• Plus 32% of earnings between $816 and $4,917.
• Plus 15% of earnings above $4,917.
Round down to nearest dime.
Figure Your Actual Benefit
Primary insurance amount is what you get if you retire
at normal retirement age – currently age 66.
• If you retire early, calculate how many months
early. Reduce primary insurance amount by 5/9 of
a percent for each month up to 36 months, then
5/12 of a percent for each additional month.
• If retire late, add 2/3 of a percent for each month
after normal retirement age. As late as age 70.