How Is Social Security Calculated?

How is my Social Security payment calculated?

Your retirement payment comes from a three-step calculation: find your average indexed monthly earnings, apply the benefit formula to get your primary insurance amount, then raise or lower that amount based on the age you claim. The primary insurance amount (PIA) is the benefit you would receive at your full retirement age (FRA), the age at which you get 100% of your calculated benefit.

The formula is deliberately progressive. It replaces a much larger share of pay for lower earners than for higher earners, so a person with twice the earnings does not get twice the check. Cost-of-living adjustments are layered on top each year from age 62 onward, whether or not you have started collecting.

You also need to qualify. Retirement benefits generally require 40 work credits, which is about 10 years of covered work. In 2026 you earn one credit for each $1,890 of covered earnings, up to four credits a year.

How is AIME calculated?

AIME, or average indexed monthly earnings, is your highest 35 years of indexed earnings added together and divided by 420, the number of months in 35 years, then rounded down to the next whole dollar. Three details determine the result.

Worked example: suppose your 35 highest indexed years average $60,000 a year. They total $2,100,000, and $2,100,000 ÷ 420 gives an AIME of $5,000. If you worked only 30 of those years at the same level, your total is $1,800,000, and $1,800,000 ÷ 420 gives an AIME of $4,285. The five zero years cost you $715 of AIME.

• Indexing: earnings before the year you turn 60 are scaled up by the growth of the national average wage index, so old wages count in today's terms. As a hypothetical, if average wages doubled between the year you earned $30,000 and the year you turned 60, that year counts as $60,000. For people turning 62 in 2026, the index year is 2024, when the wage index was $69,846.57. Earnings from age 60 onward count at face value.
• The earnings cap: only earnings up to each year's taxable maximum count. The cap is $184,500 for 2026 and $192,300 for 2027.
• Zero years: if you have fewer than 35 years of covered earnings, the missing years count as $0. Working an extra year at a good wage replaces a low or zero year and can raise your benefit, even late in your career.

What are the Social Security bend points?

Bend points are the two AIME dollar amounts where the benefit formula's percentage changes. For workers who turn 62 in 2026, they are $1,286 and $7,749. The PIA is 90% of AIME up to the first bend point, plus 32% of AIME between the two bend points, plus 15% of AIME above the second. The PIA is then rounded down to the next lower dime.

Your bend points are fixed by the year you turn 62, not the year you claim. The SSA raises them each year with national wages, which is why the figure in any article depends on its date. The percentages (90%, 32% and 15%) stay the same.

Using the $5,000 AIME from above with 2026 bend points: 90% of $1,286 is $1,157.40. The amount between the bend points is $5,000 − $1,286 = $3,714, and 32% of that is $1,188.48. Nothing falls in the 15% tier. The total is $2,345.88, rounded down to a PIA of $2,345.80, which replaces 46.9% of AIME. The 30-year worker with a $4,285 AIME gets a PIA of $2,117.00, or $228.80 less each month.

How much Social Security will I get?

Your full-retirement-age benefit depends mainly on your AIME: at 2026 bend points, an AIME of $3,000 gives about $1,706 a month and an AIME of $10,000 gives about $3,563. The table shows the PIA for several AIME levels and the share of earnings it replaces. For scale, the SSA estimated the average retired worker's benefit at $2,071 a month in January 2026, and the most anyone starting at FRA in 2026 can receive is $4,152.

For a personal number, sign in at ssa.gov and use your my Social Security statement, which is based on your real earnings history. Then enter that figure in our Social Security calculator to compare claiming ages.

How does claiming age change my benefit?

Claiming before your full retirement age permanently shrinks your benefit, and claiming after it raises your benefit until age 70. The reduction is 5/9 of 1% per month for the first 36 months before FRA and 5/12 of 1% per month beyond that. Delayed retirement credits add 2/3 of 1% per month, or 8% a year, and stop at 70.

For FRA 67, which applies to anyone born in 1960 or later, the percentages below come from our calculator's claiming formula. The dollar column applies them to the $2,345.80 PIA from our example, rounded down to a whole dollar as the SSA does, in dollars before any cost-of-living increases.

What is my full retirement age?

Your full retirement age depends on your birth year: 66 for people born from 1943 through 1954, rising two months per year to 67 for anyone born in 1960 or later. An earlier FRA means less of a cut at 62 and more credit by 70, as the table shows. Figures come from our calculator's formula for each birth year.

When should I claim Social Security?

If you expect to live past about 80, waiting usually pays more in total; if not, claiming earlier usually does. The break-even age is when the larger, later checks have made up for the checks you skipped. Using the example benefits with no investment return or cost-of-living increases, our calculator's comparison tool gives these break-even ages: 78 and 9 months for 62 versus 67, 82 and 6 months for 67 versus 70, and 80 and 5 months for 62 versus 70.

Assumptions move those ages. Comparing 62 and 70 with a 3% cost-of-living adjustment and a 5% investment return pushes the break-even to 82 and 8 months; with the same adjustment and no investment return, it falls to 78 and 3 months. The table below shows the claiming age with the highest discounted lifetime value for someone born in 1964, assuming a 3% cost-of-living adjustment, at two discount rates.

Longevity isn't the only factor. A higher earner who delays also raises the survivor benefit a spouse may inherit. Someone who has no other income, has health problems or wants to stop working may reasonably claim early. If you are building a broader plan, add your expected benefit to the retirement calculator and see our guide on how much to save for retirement.

What else can change my Social Security check?

Cost-of-living adjustments, the earnings test, Medicare premiums and income taxes can all change what you actually receive. Each January, benefits rise with a cost-of-living adjustment (COLA) based on the CPI-W inflation measure: 2.8% for 2026 and 3.6% for 2027. COLAs apply from the year you turn 62 even if you haven't claimed, so the $2,345.80 PIA in our example becomes $2,430.20 with the 2027 increase.

If you claim before FRA and keep working, the earnings test withholds $1 for every $2 you earn above $24,480 in 2026. In the year you reach FRA, it withholds $1 for every $3 above $65,160, counting only earnings before the month you reach FRA. The money isn't lost: the SSA raises your benefit at FRA to account for the withheld months, and after FRA there is no limit on earnings.

Up to 85% of benefits can be subject to federal income tax. Up to 50% is taxable when combined income (adjusted gross income, plus nontaxable interest, plus half of your benefits) exceeds $25,000 for single filers or $32,000 for joint filers, and up to 85% above $34,000 and $44,000. Medicare Part B premiums are usually deducted directly from the payment as well.