How Your Social Security Benefit Is Calculated
Your Social Security retirement benefit comes from a two-step formula: average your highest 35 years of indexed earnings, then apply 90%, 32% and 15% to three slices of that average. This article uses the bend points the SSA lists for 2026 (as of October 2026). The formula is why lower earners get back a larger share of their earnings, and why years with zero earnings pull the number down.
1. Step 1: average indexed monthly earnings
The SSA explains that benefits are typically computed using average indexed monthly earnings, or AIME. This average summarizes up to 35 years of a worker's indexed earnings.
"Indexed" means past earnings are adjusted to reflect the change in general wage levels, measured by the national average wage index, so that a dollar earned decades ago counts in line with wages near the time you become eligible. The SSA then chooses the years with the highest indexed earnings, adds them, and divides by the total number of months in those years.
Two consequences follow:
- If you worked fewer than 35 years, the missing years count as zeros in the average.
- A high-earning year late in a career can replace a low year from early on.
2. Step 2: the primary insurance amount formula
The primary insurance amount, or PIA, is the benefit you would receive if you start retirement benefits at your normal retirement age, with no reduction for claiming early and no increase for claiming late.
The PIA is the sum of three percentages applied to portions of your AIME. The dividing lines are called bend points. For someone who first becomes eligible in 2026 (generally, turns 62 in 2026), the SSA lists the bend points as $1,286 and $7,749:
- 90% of the first $1,286 of AIME, plus
- 32% of AIME between $1,286 and $7,749, plus
- 15% of AIME above $7,749.
The result is rounded down to the next lower multiple of 10 cents. The bend points change each year with average wages, and the year that applies to you is the year you reach 62.
3. Worked examples using the 2026 bend points
| AIME | 90% part | 32% part | 15% part | PIA | PIA as share of AIME |
|---|---|---|---|---|---|
| $2,500 | $1,157.40 | $388.48 | $0 | $1,545.80 | 62% |
| $4,000 | $1,157.40 | $868.48 | $0 | $2,025.80 | 51% |
| $8,500 | $1,157.40 | $2,068.16 | $112.65 | $3,338.20 | 39% |
The last column shows the design. The formula replaces a much larger share of earnings for workers with lower average earnings. A worker with three times the AIME of another does not get three times the benefit.
4. What the formula does not include
The PIA is a reference point, not necessarily the amount you will be paid. The SSA defines it as the benefit at normal retirement age, the age at which the benefit is neither reduced for early retirement nor increased for delayed retirement. Starting benefits at a different age changes the amount, so the PIA is best used to compare and plan, not as a promise of a specific monthly check.
The examples above illustrate the formula only. Your own AIME depends on your actual earnings record, and the bend points that apply to you are set by the year you turn 62, not the year you start benefits.
5. How to use this for planning
Check your earnings record. Because your benefit is built from your earnings history, errors in that record flow straight into the calculation. Your Social Security statement shows the earnings the SSA has on file.
Count your years. If you have fewer than 35 years of earnings, each additional working year replaces a zero in the average. Near the end of a career, a year of work can also replace one of your lowest earlier years.
See where the bend points fall for you. If your AIME is near the first bend point, each additional dollar of AIME adds 32 cents of monthly benefit rather than 90 cents. Above the second bend point, it adds 15 cents.
6. Key takeaways
- Social Security first averages up to 35 years of your highest indexed earnings into a monthly figure called AIME.
- The PIA formula for those first eligible in 2026 is 90% of the first $1,286, 32% up to $7,749, and 15% above that.
- An AIME of $4,000 produces a PIA of about $2,025.80; an AIME of $8,500 produces about $3,338.20.
- The formula replaces a larger share of earnings for lower earners.
- Years with no earnings count as zeros if you have fewer than 35 years of work.