How do they calculate Social Security benefits?
Social Security benefits are typically computed using "average indexed monthly earnings." This average summarizes up to 35 years of a worker's indexed earnings. We apply a formula to this average to compute the primary insurance amount (PIA).
How SS retirement is calculated?
So, if you turn 62 in 2019, the Social Security benefits formula that would apply to determine your benefits is: 90% of the first $926 in AIME. 32% of the amount of AIME between $926 and $5,583. 15% of the amount equal to or greater than $5,583 in AIME.
Is Social Security based on the last 5 years of work?
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.
How much Social Security will I get if I make $60000 a year?
That adds up to $2,096.48 as a monthly benefit if you retire at full retirement age. Put another way, Social Security will replace about 42% of your past $60,000 salary. That's a lot better than the roughly 26% figure for those making $120,000 per year.