Step 1: Index your earnings
Social Security takes your earnings for each year, up to that year's maximum, and raises them to account for how much average wages have grown since. Earnings before the year you turn 60 are indexed this way; earnings from that year on count at face value.
Step 2: Average your best 35 years
It picks your 35 highest indexed years, adds them up and divides by 420 (35 years × 12 months). The result, rounded down to the dollar, is your average indexed monthly earnings, or AIME. If you have fewer than 35 years of earnings, zeros fill the gap.
Step 3: Apply the formula
Your full benefit at full retirement age, the primary insurance amount (PIA), comes from three slices of your AIME. For people first eligible in 2027 (turning 62 in 2027):
| Slice of AIME | Share paid |
|---|---|
| First $1,340 | 90% |
| $1,340 to $8,077 | 32% |
| Above $8,077 | 15% |
The dollar points, called bend points, rise each year with average wages. The percentages are fixed by law. The result is rounded down to the dime.
Step 4: Adjust for your claiming age
Claim at full retirement age (67 if born in 1960 or later) and you get 100% of the PIA. Claim at 62 and you get as little as 70%. Wait until 70 and you get up to 124%. After that, the yearly COLA raises it. Full retirement age by birth year.
A worked example
Someone born in 1965 earned the equivalent of $60,000 a year, after indexing, for 35 years.
- Total of the 35 years: $60,000 × 35 = $2,100,000.
- AIME: $2,100,000 ÷ 420 = $5,000.
- PIA: 90% of $1,340 = $1,206.00, plus 32% of ($5,000 − $1,340) = $1,171.20. Total $2,377.20.
- At 67: $2,377 a month. At 62: 70% = $1,664. At 70: 124% = $2,947.
Try your own numbers in the Social Security calculator.
Why the formula favors lower earners
Because the first slice is replaced at 90% and the top slice at only 15%, Social Security replaces a bigger share of pre-retirement pay for people who earned less. In the example above, the full benefit replaces about 48% of average pay; at twice the earnings it replaces only about 36.5%.
Questions
How is Social Security calculated?
Social Security indexes your past earnings to wage growth, averages your 35 highest years into a monthly figure (AIME), applies a formula that pays 90%, 32% and 15% of different slices of it to get your full benefit (PIA), and then reduces or increases that for the age you claim.
What are the 2027 bend points?
$1,340 and $8,077. For people first eligible in 2027, the full benefit is 90% of average indexed monthly earnings up to $1,340, plus 32% of the amount between $1,340 and $8,077, plus 15% of the amount above $8,077.
What if I worked fewer than 35 years?
The missing years count as zero in the 35-year average, which lowers your benefit. Working an extra year replaces a zero, or a low year, with a higher one.
Updated November 6, 2026. Sources: SSA Office of the Chief Actuary, Primary Insurance Amount (2027 bend points); SSA Handbook §706; 20 CFR 404.410; 20 CFR 404.313.