(Here's the average Social Security check.) The formula for calculating your PIA is based on the average indexed monthly earnings, or AIME, in your 35 highest-earning years after age 21, up to the Social Security wage base.
Social Security uses a formula that takes into account your highest 35 years of earnings to calculate your retirement benefits. It is not based on just the best 5 years or last 5 years of earnings.
We: Base Social Security benefits on your lifetime earnings. Adjust or “index” your actual earnings to account for changes in average wages since the year the earnings were received. Calculate your average indexed monthly earnings during the 35 years in which you earned the most.
If you become disabled before your full retirement age, you might qualify for Social Security disability benefits. You must have worked and paid Social Security taxes in five of the last 10 years.
Although you need at least 10 years of work (40 credits) to qualify for Social Security retirement benefits, we base the amount of your benefit on your highest 35 years of earnings.
Key Features of the New Rule
Starting September 30, 2024, anyone who has not previously registered with us and who wants to be appointed as a representative must register with us using the Form SSA-1699 before we will recognize a new appointment request.
Have you heard about the Social Security $16,728 yearly bonus? There's really no “bonus” that retirees can collect. The Social Security Administration (SSA) uses a specific formula based on your lifetime earnings to determine your benefit amount.
If your spouse dies, do you get both Social Security benefits? You cannot claim your deceased spouse's benefits in addition to your own retirement benefits. Social Security only will pay one—survivor or retirement. If you qualify for both survivor and retirement benefits, you will receive whichever amount is higher.
You can start receiving your Social Security retirement benefits as early as age 62. However, you are entitled to full benefits only when you reach your full retirement age. If you delay taking your benefits from your full retirement age up to age 70, your benefit amount will increase.
When we figure out how much to deduct from your benefits, we count only the wages you make from your job or your net profit if you're self-employed. We include bonuses, commissions, and vacation pay.
The point is that if you earned $120,000 per year for the past 35 years, thanks to the annual maximum taxable wage limits, the maximum Social Security benefit you could get at full retirement age is $2,687.
By waiting until age 70 to start receiving benefits, you've maximized the monthly payment amount. Your benefit amount increases every month you delay until you reach 70 years old.
But even if you never worked and therefore don't have an earnings record, you're not necessarily out of luck. If you're married (or were married) to someone who's entitled to Social Security, you can collect spousal benefits equal to 50% of your husband or wife's benefits at full retirement age.
Each survivor benefit can be up to 100% of your benefit. The amount may be reduced if the women start benefits before their own full retirement age, but they don't have to share — the amount isn't reduced because you've had more than one spouse.
Ninety-five percent of never-beneficiaries are individuals whose earnings histories are insufficient to qualify for benefits. Late-arriving immigrants and infrequent workers comprise the vast majority of these insufficient earners.
Spouses and ex-spouses
Payments start at 71.5% of your spouse's benefit and increase the longer you wait to apply. For example, you might get: Over 75% at age 61.
Exactly how much in earnings do you need to get a $3,000 benefit? Well, you just need to have averaged about 70% of the taxable maximum. In our example case, that means that your earnings in 1983 were about $22,000 and increased every year to where they ended at about $100,000 at age 62.
If you've worked and paid Social Security taxes for 10 years or more, you'll get a monthly benefit based on that work.
To qualify to get $144 added back to your Social Security check, you can enroll in a Medicare Advantage plan that offers a Part B premium reduction or giveback benefit.
Social Security covers both spouses, regardless of whether one or both brought home a paycheck over the years. A married person may collect benefits based on their own earnings or receive a maximum of 50% of their spouse's Social Security benefits, whichever is greater.