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 together. That average becomes the foundation for your monthly check. If you worked fewer than 35 years, the formula counts the missing years as zero, which lowers your average. The Social Security Administration (SSA) adjusts older earnings upward to account for wage growth over time, so a dollar you earned in 1985 is not compared directly to a dollar you earned in 2020.

The SSA calls this adjusted average your Average Indexed Monthly Earnings (AIME). Once they calculate your AIME, they explore a formula called the Primary Insurance Amount (PIA) formula, which uses three "bend points" — dollar thresholds that determine how much of your average earnings converts into a monthly benefit. The bend points change every year and are different for each person, based on national wage trends in the year you turn 60.

Key Takeaways

  • Social Security uses your 35 highest-earning years; years you did not work count as zero and reduce your average.
  • The SSA adjusts your older earnings upward to account for inflation and wage growth before calculating your average.
  • Your benefit amount depends on when you claim: claiming at 62 gives you less per month than claiming at your full retirement age, and waiting until 70 gives you more.
  • You can see your own earnings record and estimated benefit on your Social Security account at ssa.gov, and you should review it every few years for errors.
  • Spousal benefits, survivor benefits, and Government Pension Offset rules can change how much you receive if you also have a government pension.

How the Bend Points Work

Once the SSA calculates your AIME, the PIA formula takes a percentage of your earnings up to the first bend point, a smaller percentage of earnings between the first and second bend point, and an even smaller percentage of earnings above the second bend point. This means your first dollars of earnings replace a higher percentage of your income than your later dollars do.

For someone who turned 60 in 2024, the first bend point is $1,174 and the second is $7,078. The formula replaces 90 percent of your earnings up to $1,174, then 32 percent of earnings between $1,174 and $7,078, then 15 percent of anything above $7,078. The bend points are higher for younger workers and lower for older workers, because they are set based on the average wage in the year you turned 60. This means two people born in different years will have different bend points even if they earned the same amount of money.

When You Claim Changes What You Get

Your full retirement age — the age at which you receive 100 percent of your calculated benefit — depends on your birth year. For people born between 1943 and 1954, full retirement age is 66. For people born between 1955 and 1960, it rises gradually from 66 and 2 months to 67. For people born in 1960 or later, full retirement age is 67.

If you claim before your full retirement age, your monthly benefit is permanently reduced. Claiming at 62 (the earliest age you can claim) reduces your benefit by roughly 30 percent if your full retirement age is 67. If you wait until 70, your benefit increases by roughly 24 percent per year you delay past your full retirement age, meaning a 70-year-old receives about 124 percent of their full retirement age benefit. The exact reduction or increase depends on your birth year.

Spousal and Survivor Benefits

If you are married, your spouse may be may have access to to a benefit based on your earnings record. A spouse who has never worked, or whose own benefit would be smaller, can receive up to 50 percent of your full retirement age benefit if they claim at their full retirement age. If your spouse claims before their full retirement age, that percentage is lower. A divorced spouse can also claim on your record if you were married at least 10 years, you are both at least 62, and you have been divorced for at least 2 years (or any length of time if you are both 62 or older).

If you die, your surviving spouse, children under 19 (or 19 if still in high school), and dependent parents may receive survivor benefits based on your earnings record. The total amount paid to all family members cannot exceed roughly 150 to 180 percent of what you would have received, so benefits are divided among them. Each family member's share is calculated separately, and the rules for who qualifies are strict — a surviving spouse must be at least 60 (or 50 if disabled, or any age if caring for a child under 16).

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 Government Pension Offset (GPO) reduces your spousal or survivor benefit by two-thirds of your government pension. The Windfall Elimination Provision (WEP) reduces your own Social Security benefit if you also have a government pension.

These rules are complex and affect different people in different ways. If you worked for a government agency, school district, or railroad and did not pay Social Security taxes on that job, you should discuss these rules with the SSA before you claim. The reduction is not automatic — it depends on when you were hired and what type of work you did — but it can be substantial.

How to Check Your Earnings Record

You can see the SSA's record of your earnings and get an estimate of your benefit by creating an account at ssa.gov. Once you log in, you can view your earnings history year by year and see how much the SSA says you earned in Social Security wages. You should review this record every few years, because errors can lower your benefit and the SSA can only correct errors that are more than three years, three months, and 15 days old.

If you find an error — a year where you earned more than the SSA shows, or a year that should not be there — contact the SSA with your W-2 forms or tax returns as proof. Correcting an error now can mean hundreds of dollars more per month in retirement. If you do not have an online account yet, you can call the SSA at 1-800-772-1213 to request a paper statement, though the online account is faster.

What Happens If You Work While Receiving Benefits

If you claim Social Security before your full retirement age and continue to work, the SSA reduces your benefit by $1 for every $2 you earn above an annual limit. For 2024, that limit is $23,400. In the year you reach your full retirement age, the reduction is $1 for every $3 you earn above a different limit ($62,160 for 2024), and only earnings before the month you reach full retirement age count. Once you reach your full retirement age, you can earn as much as you want with no reduction to your benefit.

This is a temporary reduction, not a permanent one. The SSA recalculates your benefit at your full retirement age to account for the months you did not receive a check, so you are not penalized long-term for working. However, the reduction can be substantial in the years before full retirement age, so it is worth calculating whether claiming early and working makes sense for your situation.

Frequently Asked Questions

Does working longer increase my Social Security benefit?

Yes. If you work past age 60 and your new earnings are higher than one of your lowest 35 years on record, the SSA will recalculate your benefit and replace that lower year with the new one. This can increase your monthly check. However, the increase is usually modest unless you had very low earnings in your early career or took time off work.

Can I see how much I will get if I claim at 62 versus 67 versus 70?

Yes. Your Social Security account at ssa.gov shows your estimated benefit at full retirement age. You can also call 1-800-772-1213 and ask the SSA to estimate your benefit at different ages. These are estimates only — your actual benefit depends on your final earnings record and the bend points in effect when you claim.

What if I was born outside the United States?

You can still receive Social Security if you worked in the U.S. long enough and paid Social Security taxes. You must be a U.S. citizen or a national, or a lawful permanent resident who has been in the U.S. for at least five years. If you live outside the U.S., you can still receive benefits, but the rules are more complex and some countries have special agreements with the SSA.

Does my spouse's benefit reduce mine?

No. Your spouse's benefit is calculated separately based on their own earnings record or as a percentage of yours, but it does not reduce what you receive. The total paid to your household is the sum of both benefits.

What if I made a mistake and claimed too early?

If you claimed within the last 12 months, you can withdraw your claim, repay what you received, and claim again later at a higher amount. This option is available only once in your lifetime. If more than 12 months have passed, you cannot withdraw, but you can request a one-time increase at your full retirement age under certain circumstances — contact the SSA to discuss your situation.