Social Security benefits may seem like a dauntingly complex topic. But in fact, they’re rather simple. When you have 35 or more years of work behind you, your Social Security benefits are calculated carefully to give you the best possible return.
The process for calculating benefits begins with restating your previous earnings in terms of today’s wages, in order to reflect their growth. Next, your earnings for the highest 35 years are first averaged and then divided by 12. This is your AIME (Average Indexed Monthly Earnings). Finally, the PIA (Primary Insurance Amount) is calculated by applying the Social Security benefit formula to your AIME.
If you’re married, you have additional options as well. Couples are entitled to benefits that are either based on their own work history OR up to 50% of the higher earner’s benefit (whichever is higher). If a higher-earning spouse passes away, the living spouse may also be eligible for a survivor’s benefit. And waiting until full retirement age (which depends on your year of birth) can make you eligible for an even greater range of benefits.