What determines your Social Security payment
Your Social Security benefit is based on three things: how much you earned over your working life, when you were born, and when you claim. The Social Security Administration (SSA) does not use your total lifetime earnings. Instead, it looks at your highest 35 years of wages, adjusts them for inflation, and calculates an average. If you worked fewer than 35 years, it counts zeros for the missing years, which lowers your benefit.
The age you claim matters enormously. You can claim as early as 62, but your payment will be permanently reduced — roughly 30 percent lower than if you waited until your full retirement age. If you delay past your full retirement age (which ranges from 66 to 67 depending on your birth year), your benefit grows by about 8 percent per year until age 70. A person born in 1960 who claims at 62 might receive $1,500 per month, while the same person claiming at 70 might receive $2,800 per month for life.
Key Takeaways
- Your benefit is calculated from your highest 35 years of earnings, adjusted for inflation, not your total lifetime pay.
- Claiming at 62 gives you a smaller monthly payment for life; claiming at 70 gives you a larger monthly payment for life.
- Your full retirement age (when you get your unreduced benefit) depends on your birth year and ranges from 66 to 67.
- You can see your estimated benefit amount on your Social Security account at ssa.gov, which updates each year.
- Spousal and survivor benefits are calculated differently and may be available even if you did not work enough to claim on your own record.
How the SSA calculates your average earnings
The SSA starts by taking your 35 highest-earning years. If you worked more than 35 years, they ignore your lowest-earning years. If you worked fewer than 35 years — say, 30 years — they count five years of zero earnings, which reduces your average.
Next, the SSA adjusts each year's earnings for inflation using a national wage index. This means a dollar you earned in 1990 is not treated the same as a dollar you earned in 2020. The adjustment makes it possible to compare earnings across decades fairly. After adjustment, the SSA adds up all 35 years and divides by 420 (the number of months in 35 years) to get your average indexed monthly earnings, or AIME.
The AIME is not your benefit yet. It is the number the SSA plugs into a formula to calculate your primary insurance amount, or PIA. The PIA is your full retirement age benefit — the amount you would receive if you claimed at your full retirement age.
The bend points formula and why it favors lower earners
The SSA uses a formula with two bend points — dollar thresholds that determine how much of your AIME becomes your benefit. For 2024, the bend points are $1,174 and $7,078. The formula replaces 90 percent of your AIME up to the first bend point, 32 percent between the first and second bend point, and 15 percent of anything above the second bend point.
This means a person with a low AIME gets back a much higher percentage of their average earnings than a high earner does. Someone with an AIME of $1,000 receives roughly $900 per month. Someone with an AIME of $5,000 receives roughly $1,800 per month — not five times as much, even though their earnings were five times higher. The bend points change each year based on national wage growth.
The bend points formula is intentional: Social Security is designed to replace a larger share of income for lower-wage workers and a smaller share for higher-wage workers. A low-income worker might replace 40 percent of their pre-retirement earnings; a high-income worker might replace 25 percent.
How your birth year affects your full retirement age
Your full retirement age is when you can claim your full benefit without any reduction. It is not 65 for everyone. Congress raised it gradually starting in 1983, and it now depends on your birth year.
| Birth Year | Full Retirement Age |
|---|---|
| 1943–1954 | 66 |
| 1955 | 66 and 2 months |
| 1956 | 66 and 4 months |
| 1957 | 66 and 6 months |
| 1958 | 66 and 8 months |
| 1959 | 66 and 10 months |
| 1960 and later | 67 |
If you claim before your full retirement age, your benefit is reduced. The reduction is steeper the earlier you claim. If you claim at 62 and your full retirement age is 67, your benefit is roughly 70 percent of your PIA. If you claim at 65, it is roughly 86 percent. If you delay past your full retirement age, your benefit increases by about 8 percent per year until age 70, after which it stops growing.
Spousal and survivor benefits use a different calculation
If you are married, you may be able to claim a benefit based on your spouse's earnings record, even if you did not work or worked very little. A spousal benefit is typically up to 50 percent of your spouse's PIA, but only if you claim at your full retirement age. If you claim earlier, the reduction is steeper than it is for your own benefit.
If your spouse has passed away, you may be able to claim a survivor benefit based on their record. Widow or widower benefits are calculated differently than spousal benefits and may be higher. A widow or widower can claim a reduced benefit as early as 60, or a full benefit at their full retirement age. Children and dependent parents may also be able to claim on a deceased worker's record.
Spousal and survivor benefits are subject to a family maximum. The total amount paid to all family members on one worker's record cannot exceed 150 to 180 percent of that worker's PIA. If multiple family members claim, the SSA divides the maximum among them, which may reduce each person's individual benefit.
Where to find your estimated benefit
The SSA publishes a Social Security Statement for each person with a work record. You can view yours by creating an account at ssa.gov and logging into "my Social Security." The statement shows your earnings history (so you can check for errors), your estimated benefit at different claim ages, and your estimated family benefits if you become disabled or pass away.
The estimate assumes you will continue working and earning at roughly your current rate until you claim. If you plan to retire early or late, or if your earnings change significantly, the estimate will change. The SSA updates your statement each year in September, after they receive wage reports from employers.
If you do not have an online account, you can request a paper statement by calling the SSA at 1-800-772-1213 or visiting a local Social Security office. Processing a paper request takes about two weeks.
Frequently Asked Questions
Does working longer increase my benefit?
Yes. If you work additional years and earn more than some of your lowest 35 years, the SSA replaces those lower years with your new earnings. This can increase your AIME and your benefit. However, the increase depends on how much you earn and which years you replace. Working one more year at high earnings will increase your benefit more than working one more year at low earnings.
What if I made a mistake on my earnings record?
Contact the SSA as soon as you notice an error. You can call 1-800-772-1213 or visit your local office. Bring documents that show what you actually earned — W-2 forms, tax returns, or pay stubs. The SSA can correct errors going back three years, three months, and 15 days from the date you report them. Older errors may be harder to fix.
Can I see how much my benefit will be if I claim at 62 versus 70?
Yes. Your Social Security Statement on ssa.gov shows your estimated benefit at your full retirement age, at 62, and at 70. These are estimates based on your current earnings record and assume you do not work after you claim. If you plan to work while receiving benefits before your full retirement age, your benefit may be temporarily reduced.
Does my spouse's benefit affect my own benefit amount?
No. Your benefit is calculated based on your own earnings record only. Your spouse's benefit is calculated separately based on their record. However, if you both claim spousal benefits, the family maximum may reduce what each of you receives if you have other family members claiming on one of your records.
What happens to my benefit if I was not born in the United States?
You can receive Social Security benefits even if you were not born in the U.S., as long as you have a valid Social Security number and meet the work requirements (typically 40 work credits, earned over any number of years). If you are not a U.S. citizen, there are additional rules about where you can live and still receive benefits. Contact the SSA for details specific to your situation.