How are Social Security benefits calculated?
Your 35 best years, indexed and averaged into AIME, run through a three-tier formula to get your PIA, then adjusted for the age you claim. Here is each step with 2026 figures, a worked example and a calculator.
Last updated September 29, 2026. 2026 bend points, taxable maximum and COLA from the Social Security Administration.
Social Security takes your 35 highest years of earnings, indexes them for wage growth, and averages them into a monthly figure (AIME). It then pays 90% of the first $1,286 of AIME, 32% of the amount up to $7,749, and 15% above that (2026 bend points). That is your full-retirement-age benefit (PIA), which is reduced if you claim early and increased if you wait.
What are the steps in the Social Security benefit formula?
- Index your earnings. Each year’s earnings (up to that year’s taxable maximum) are multiplied by an indexing factor so old wages count in today’s terms. Earnings from age 60 on count at face value.
- Take your top 35 years. Add them up and divide by 420 months. That is your AIME, average indexed monthly earnings. Fewer than 35 years means zeros fill the gap.
- Apply the bend points to get your PIA, primary insurance amount. The bend points are the ones for the year you turn 62.
- Adjust for claiming age. Claim at 62 and you get 70% of PIA (if your full retirement age is 67); wait to 70 and you get 124%.
- Add COLAs. Every cost-of-living adjustment from the year you turn 62 onward is applied, even if you haven’t claimed yet. The 2026 COLA is 2.8%.
What are the 2026 bend points?
| Year you turn 62 | First bend point | Second bend point |
|---|---|---|
| 2024 (born 1962) | $1,174 | $7,078 |
| 2025 (born 1963) | $1,226 | $7,391 |
| 2026 (born 1964) | $1,286 | $7,749 |
The percentages never change: 90%, 32%, 15%. The bend points rise every year with the national average wage index. Because of the 90% first tier, the formula replaces a much bigger share of pay for lower earners than for higher earners.
What does the calculation look like with real numbers?
Worked example. Someone born in 1964 with 35 years of indexed earnings averaging $72,000.
AIME: $72,000 × 35 = $2,520,000, ÷ 420 = $6,000.
PIA: 90% × $1,286 = $1,157.40, plus 32% × ($6,000 − $1,286) = $1,508.48. Total $2,665.88, rounded down to the dime: $2,665.80 a month at 67.
Claiming at 62 instead: 70% × $2,665.80 = $1,866.06, rounded down to $1,866. At 70: 124% = $3,305.
Try the formula on your own numbers
How much does claiming age change the benefit?
For anyone born in 1960 or later (full retirement age 67). The reduction is 5/9 of 1% a month for the first 36 months early and 5/12 of 1% for each month beyond; delayed credits add 2/3 of 1% a month (8% a year) up to 70.
| Claim at | Share of PIA | On a $2,665.80 PIA |
|---|---|---|
| 62 | 70% | $1,866 |
| 64 | 80% | $2,132 |
| 66 | 93.3% | $2,488 |
| 67 | 100% | $2,665 |
| 68 | 108% | $2,879 |
| 70 | 124% | $3,305 |
The break-even calculator shows at what age waiting pays for itself.
What happens if I worked fewer than 35 years?
Every missing year is a zero in the average. With 25 years at $72,000 instead of 35, AIME drops from $6,000 to $4,285 and PIA from $2,665.80 to $2,117.00, about 21% less. One more year of work replaces a zero, which is why a few extra years late in a career can raise the benefit noticeably. You also need 40 credits (about 10 years) to qualify at all; in 2026 you earn one credit for each $1,890 of earnings, up to four a year.
Is there a maximum Social Security benefit?
Yes. Earnings above the taxable maximum ($184,500 in 2026) are not taxed and not counted. Someone who earned the maximum every year gets $4,152 a month at full retirement age in 2026, $2,969 at 62 or $5,181 at 70. See the maximum benefit guide.
Do WEP and GPO still reduce benefits?
No. The Social Security Fairness Act, signed January 5, 2025, repealed the Windfall Elimination Provision and the Government Pension Offset for benefits payable after December 2023. A teacher or public employee with a non-covered pension now gets the regular formula above. Background: WEP and GPO claim guide.
Can my benefit be reduced after I claim?
- Earnings test: if you claim before full retirement age and keep working, $1 is withheld for every $2 earned above $24,480 in 2026 ($1 for $3 above $65,160 in the year you reach FRA). It is added back later. See the earnings test calculator.
- Medicare Part B is deducted from the check once you are on Medicare, more if IRMAA applies (IRMAA calculator).
- Income tax: up to 85% of benefits can be taxable (taxable Social Security calculator).
For a full estimate with spousal and survivor options, use the Social Security calculator or the couples calculator.
Questions people ask
How is the Social Security benefit calculated?
What is AIME?
What is PIA in Social Security?
What are the Social Security bend points for 2026?
How much Social Security will I get if I earn $72,000 a year?
Sources
Every figure on this page and where it comes from. Checked September 29, 2026.
- SSA: Primary Insurance Amount formula: 90% / 32% / 15% and how bend points are applied.
- SSA: Benefit formula bend points: $1,286 and $7,749 for 2026; $1,226 / $7,391 for 2025; $1,174 / $7,078 for 2024.
- SSA: 2026 COLA fact sheet: 2.8% COLA, $184,500 taxable maximum, $1,890 per credit, earnings-test limits $24,480 / $65,160, maximum benefit at FRA $4,152.
- SSA: Social Security Benefit Amounts (indexing and AIME): How earnings are indexed and averaged.
- SSA: Early or late retirement: Reduction of 5/9 and 5/12 of 1% a month; delayed credits of 2/3 of 1% a month.
- SSA: Social Security Fairness Act: WEP and GPO repealed for benefits payable after December 2023.
- 42 U.S.C. §415 (computation of PIA): The statute behind the formula and the rounding rules.
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