35-year earnings record
Social Security retirement benefits: how they are calculated
Social Security retirement benefits replace roughly 40% of pre-retirement income for average earners. Full retirement age is 67 for those born 1960 or later. Claiming at 62 reduces benefits ~30% permanently; delaying past full retirement age increases benefits 8% per year up to age 70. The break-even age between early and late claiming is typically 78-82.
Level
Try calculatorKey takeaways
04 · ideas- Benefits are based on your highest 35 earning years, indexed for inflation
- Full Retirement Age (FRA) is 66 or 67 depending on birth year
- Claiming at 62 permanently reduces benefits by up to 30%
- Delaying to age 70 increases benefits by 8% per year beyond FRA
Social Security retirement benefits are calculated from your earnings history.
AIME: Your highest 35 years of indexed (inflation-adjusted) earnings are averaged to get the Average Indexed Monthly Earnings.
PIA formula (2024): The AIME is converted to a Primary Insurance Amount using a progressive formula:- 90% of the first $1,174 of AIME
- 32% of AIME between $1,174 and $7,078
- 15% of AIME above $7,078
This structure replaces a higher percentage of income for lower earners than for higher earners.