how is social security payment calculated
Three steps to calculate social security benefits. 1  First, a workerâs previous earnings are restated in terms of todayâs wages to reflect wage growth. 2  Second, earnings for the highest 35 years are averaged and divided by the number of months in 35 years to arrive at Average Indexed Monthly Earnings (AIME).
1 Second, earnings for the highest 35 years are averaged and divided by the number of months in 35 years to arrive at Average Indexed Monthly Earnings (AIME). 2  Third, the Social Security benefit formula is applied to AIME to produce the Primary Insurance Amount (PIA), the benefit payable at the Full Retirement Age (FRA) .