The Basic Formula: Your 35 Highest-Earning Years

Social Security takes your earnings record from your entire working life, finds your 35 highest-earning years, and averages them. The result is called your Primary Insurance Amount, or PIA. This is the monthly payment you receive at your full retirement age — the age when you can claim without any reduction.

If you worked fewer than 35 years, Social Security counts the missing years as zeros, which lowers your average. You need at least 10 years of work (40 work credits) to be may have access to to a benefit at all. Each year you work adds one credit, up to a maximum of four credits per year.

The calculation happens in three steps: Social Security indexes your earnings to account for wage growth over time, averages your highest 35 years, then applies a formula that gives you a larger percentage of your lower earnings and a smaller percentage of your higher earnings. This is why the benefit replaces a bigger share of income for lower-wage workers than for higher-wage workers.

Key Takeaways

  • Social Security uses your 35 highest-earning years; if you worked fewer years, the missing years count as zero and reduce your benefit.
  • Your benefit amount depends on when you claim: claiming at 62 reduces it by roughly 30 percent, claiming at 70 increases it by roughly 24 percent compared to your full retirement age.
  • You can view your actual earnings record and estimated benefit on your Social Security account at ssa.gov, which shows the numbers Social Security is using.
  • Earnings after you claim do not change your benefit amount unless you claim before full retirement age and earn above the annual limit, which triggers a temporary reduction.
  • If you were married or divorced, you may be may have access to to a benefit based on your spouse's record, which is calculated separately and may be higher than your own.

How Your Earnings Record Becomes Your Benefit

Social Security receives your earnings information from your employer's tax reports each year. You can see what they have on file by creating an account at ssa.gov and viewing your earnings record. This record is the foundation of your benefit calculation, so checking it for errors is important — if your employer reported your wages incorrectly, your benefit will be too low.

The agency indexes your earnings, meaning it adjusts older years' wages upward to reflect wage growth in the economy. This prevents workers who earned money decades ago from being penalized simply because wages were lower then. The indexing factor is based on the national average wage index for the year you turn 60. Once your earnings are indexed, Social Security picks your 35 highest years and divides the total by 420 months (35 years × 12 months) to get your average indexed monthly earnings, or AIME.

Your AIME is then run through a bend point formula, which applies different percentages to different portions of your earnings. For 2024, the formula is roughly 90 percent of the first $1,174 of your AIME, plus 32 percent of earnings between $1,174 and $7,078, plus 15 percent of anything above $7,078. These dollar amounts, called bend points, change each year based on wage growth. The result is your Primary Insurance Amount.

Claiming Age and How It Changes Your Payment

Your Primary Insurance Amount is what you receive if you claim at your full retirement age. Full retirement age is between 66 and 67 depending on your birth year. If you claim earlier, your benefit is permanently reduced. If you claim later, your benefit grows.

Claiming at 62 (the earliest possible age) reduces your benefit by roughly 30 percent. Claiming at 70 (the latest age to claim) increases your benefit by roughly 24 percent compared to your full retirement age. The exact reduction or increase depends on your birth year, because the formula accounts for how many months early or late you are claiming. Each month you delay between 62 and 70 adds roughly 0.67 percent to your benefit.

This choice is permanent once you claim, so the timing decision is significant. A person who claims at 62 receives payments for eight more years than someone who waits until 70, but each monthly payment is smaller. The break-even point — when the total lifetime payments are equal — is typically around age 80 to 82, though this varies by individual circumstances.

What Happens to Your Benefit After You Claim

Once you are receiving Social Security, your benefit amount stays the same month to month, except for annual cost-of-living adjustments, or COLA. Each January, Social Security increases all benefits by a percentage tied to inflation. This adjustment protects your purchasing power over time, but it is not a recalculation of your benefit — it is a percentage increase applied to what you already receive.

If you claimed before your full retirement age and continue working, Social Security temporarily reduces your benefit if your earnings exceed an annual limit. For 2024, that limit is $23,400 per year. For every $2 you earn above the limit, your benefit is reduced by $1. Once you reach your full retirement age, this earnings limit no longer applies, and your benefit is not reduced no matter how much you earn. This is also when Social Security recalculates your benefit to account for the months you did not receive a payment due to the earnings limit — you receive a higher benefit going forward to make up for those months.

Earnings after you claim do not change your benefit calculation itself. Your benefit is locked in based on your earnings record up to the month you claimed. Future work does not increase your Primary Insurance Amount.

Spousal and Survivor Benefits Based on Your Record

If you are married, your spouse may be may have access to to a benefit based on your earnings record. A spouse can receive up to 50 percent of your Primary Insurance Amount if they claim at their full retirement age. If they claim earlier, the benefit is reduced. A divorced spouse can receive the same benefit if the marriage lasted at least 10 years and they are at least 62 years old.

Your children and your surviving spouse (if you pass away) also have benefits based on your record. A child can receive up to 75 percent of your Primary Insurance Amount until age 19 (or 19 if still in high school). A surviving spouse caring for a child under 16 can receive benefits at any age. These benefits are calculated as a percentage of your Primary Insurance Amount, not as a separate calculation.

There is a family maximum: the total amount paid to all family members on your record cannot exceed roughly 150 to 180 percent of your Primary Insurance Amount. If multiple family members are may have access to, Social Security divides the family maximum among them, which may reduce each person's individual benefit.

Government Pension Offset and Windfall Elimination Provision

If you receive a pension from work where you did not pay Social Security taxes — typically government employment — two rules may reduce your Social Security benefit. The Windfall Elimination Provision changes the bend point formula used to calculate your benefit, usually lowering it. The Government Pension Offset reduces any spousal or survivor benefit you would receive based on someone else's record.

These rules apply only to pensions earned from work not covered by Social Security. If you paid Social Security taxes on all your work, these rules do not affect you. The reduction is not automatic; Social Security applies it only if they have a record of your government pension. If you think you may be affected, you can ask Social Security to explain how these rules apply to your specific situation.

How to Check Your Estimated Benefit

Social Security sends a statement to everyone age 60 and older who is not yet claiming. You can also create a free account at ssa.gov and view your statement anytime. The statement shows your earnings record, your estimated benefit at different claiming ages, and an estimate of what your family members might receive.

The estimate assumes you continue working and earning at your current level until you claim. If your earnings change significantly, the estimate will change. The statement also shows your work credits and whether you have enough to be may have access to to a benefit. This is the most accurate picture of your benefit available to you before you actually claim.

If you find an error in your earnings record, you can contact Social Security to correct it. Errors are usually caught within three years, but correcting them as soon as you notice them prevents them from affecting your benefit calculation.

Frequently Asked Questions

Does working longer always increase my Social Security benefit?

Working longer increases your benefit only if your new earnings are higher than one of your current 35 highest-earning years. If you have 35 years of high earnings already, adding a lower-earning year does not help. However, if you have fewer than 35 years of work, each additional year replaces a zero in the calculation and raises your average.

What if I made very little money in some years?

Those years are included in your 35 highest-earning years if you do not have 35 years of work. If you do have 35 years, Social Security automatically uses your 35 highest years and ignores the low-earning years. You cannot choose which years to exclude.

Can I change my claiming age after I start receiving benefits?

You can withdraw your claim and reapply later only within 12 months of claiming and only if you have not yet reached your full retirement age. If you withdraw, you must repay all benefits received. After 12 months or after reaching full retirement age, you cannot change your claiming age.

How does marriage or divorce affect my benefit amount?

Your own benefit is based only on your own earnings record and does not change if you marry or divorce. However, you may become may have access to to a spousal or ex-spousal benefit, which is calculated separately. A current spouse must be at least 62; an ex-spouse must be at least 62 and the marriage must have lasted at least 10 years.

Will my benefit be reduced if I have other income or savings?

Social Security does not reduce your benefit based on savings, investments, or other income. The only earnings that trigger a reduction are wages from work, and only if you claimed before your full retirement age and earn above the annual limit. Pensions, rental income, and investment income do not count.