The Basic Formula: Your 35 Highest-Earning Years

Social Security uses a specific formula to turn your work history into a monthly payment. The system looks at your earnings record for the 35 years you earned the most money. If you worked fewer than 35 years, it fills in zeros for the missing years — which lowers your benefit. If you worked more than 35 years, Social Security drops your lowest-earning years and keeps only the highest 35.

The Social Security Administration (SSA) adjusts all your past earnings to account for wage growth over time. This means your 1990 earnings are not compared dollar-for-dollar to your 2020 earnings. Instead, they are adjusted upward so the comparison is fair. Once all 35 years are adjusted, the SSA adds them together and divides by 420 (the number of months in 35 years) to get your average indexed monthly earnings, or AIME.

Key Takeaways

  • Social Security counts your 35 highest-earning years; years with no earnings count as zero and lower your total.
  • Past earnings are adjusted for wage growth so earnings from different decades are compared fairly.
  • The SSA applies a bend-point formula to your average earnings, paying a higher percentage on lower amounts and a lower percentage on higher amounts.
  • Your age when you start benefits changes the amount: starting at 62 reduces it, waiting until 70 increases it.
  • You can view your own earnings record and estimated benefit on your my Social Security account at ssa.gov.

The Bend-Point Formula: Why Lower Earners Get a Better Deal

Once the SSA knows your AIME, it applies the bend-point formula. This formula is designed so that people who earned less during their working years get a higher percentage of their earnings replaced by Social Security. Someone who earned $20,000 a year gets a bigger percentage back than someone who earned $100,000 a year.

The bend points change each year and depend on the national wage index. For 2024, the first bend point is $1,174 and the second is $7,078 (these numbers change annually). The formula works like this: you get 90 percent of your AIME up to the first bend point, then 32 percent of the amount between the first and second bend point, then 15 percent of anything above the second bend point. The result is your primary insurance amount, or PIA — the benefit you would receive at your full retirement age.

How Your Age When You Start Changes Your Payment

The PIA is your benefit at full retirement age, but you do not have to start at that age. If you start at 62, your benefit is permanently reduced — the reduction ranges from about 25 percent to 30 percent depending on your birth year. If you delay past your full retirement age, your benefit grows by about 8 percent per year until age 70.

This means two people with identical work histories can receive very different monthly amounts depending on when they claim. Someone born in 1960 with a PIA of $2,000 would receive roughly $1,500 per month at 62, $2,000 at age 67 (full retirement age), or $2,480 at age 70. The SSA calls the increase for waiting delayed retirement credits.

Earnings Adjustments for Wage Growth Over Time

Social Security does not straightforward add up your raw earnings from 1985 and 2020 and divide by 35 years. Instead, it adjusts older earnings upward using the national average wage index. This index tracks how much the average American worker earned each year.

The SSA applies the wage index up to the year you turn 60. After that, your actual earnings are used without adjustment. This means your earnings from age 60 onward are counted at face value, while your earnings from earlier decades are scaled up to reflect wage growth. For example, if you earned $30,000 in 1990 and the wage index shows that average wages have roughly doubled since then, your 1990 earnings might be adjusted to $60,000 for the calculation.

What Happens If You Have Gaps in Your Work History

If you took time out of the workforce — to raise children, care for a family member, or for any other reason — those years count as zero earnings in the 35-year calculation. A five-year gap means five years of zeros, which significantly lowers your average. This is one reason why people with interrupted careers often receive lower benefits than those with steady work.

Social Security does offer child-rearing years exclusion for parents who left work to care for children born after 1954, but this applies only to a limited number of years and only under specific conditions. You cannot change your work history retroactively, but understanding how gaps affect your benefit can help you decide whether working longer before claiming is worthwhile.

How Government Pensions Affect Your Social Security Benefit

If you worked for a federal, state, or local government and did not pay Social Security taxes on that job, you may be subject to the Government Pension Offset (GPO) or the Windfall Elimination Provision (WEP). These rules reduce your Social Security benefit if you also receive a government pension.

The WEP changes how your bend-point formula is calculated, typically lowering your benefit by 25 to 50 percent depending on how many years you paid into Social Security. The GPO reduces any spousal or survivor benefit you might receive based on someone else's record. These rules are complex and vary based on your birth year and when you started your government job. The SSA can tell you whether either rule affects you.

Checking Your Own Earnings Record and Estimate

You do not have to wait until you claim to see how Social Security calculates your benefit. You can create a free account at ssa.gov and log into my Social Security. This account shows your complete earnings record year by year, lets you correct any errors, and provides an estimate of your benefit at different ages (62, full retirement age, and 70).

The estimate assumes you will continue working at your current pace until you claim. If you plan to retire early or work longer, the estimate will change. Checking your record every few years is also a good way to catch errors — if an employer reported your earnings incorrectly, you can ask the SSA to correct it, though you must do so within a time limit.

Frequently Asked Questions

Does Social Security count all the years I worked, or just some of them?

Social Security counts your 35 highest-earning years. If you worked fewer than 35 years, zeros are added for the missing years, which lowers your benefit. If you worked more than 35 years, your lowest-earning years are dropped.

If I worked part-time for many years, will that hurt my benefit?

Yes, part-time earnings are lower than full-time earnings, so they pull down your average. However, only your 35 highest years count. If you have years with very low earnings, they may be excluded if you worked 35 or more years total. Working longer at higher earnings can replace low-earning years.

Can I see what my benefit will be before I claim?

Yes. Create a free account at ssa.gov and log into my Social Security. You will see your earnings record and benefit estimates at ages 62, full retirement age, and 70. The estimate assumes you continue working at your current pace.

What if there is an error in my earnings record?

Log into my Social Security and review your year-by-year earnings. If you spot an error, contact the SSA with your W-2 or tax return as proof. You must report errors within a time limit, so do not delay if you find a mistake.

Does waiting until 70 to claim always give me more money overall?

Waiting increases your monthly payment by about 8 percent per year, but you receive fewer payments overall. Whether waiting pays off depends on how long you live. Someone who lives into their mid-80s typically comes out ahead by waiting; someone who dies in their early 70s would have received more total money by claiming at 62. Your health and family history are personal factors to consider.