Social Security retirement benefits are calculated using your highest 35 years of indexed earnings, not just your recent income.
The Social Security Administration (SSA) determines your monthly retirement benefit by first calculating your average indexed monthly earnings (AIME) over your highest 35 years of earnings. These earnings are adjusted for inflation to reflect their value over time. Then, a formula is applied to your AIME to arrive at your primary insurance amount (PIA), which is the benefit you would receive if you start claiming at your full retirement age. Finally, your benefit is adjusted based on the age you choose to begin receiving payments.
This information provides a general overview of how Social Security benefits are calculated and does not constitute financial advice.
Can I choose which 35 years of earnings are used for my Social Security benefit?
No, you cannot choose which 35 years of earnings are used for your Social Security benefit calculation. The Social Security Administration (SSA) automatically uses your highest 35 years of earnings, after they have been indexed for inflation. The agency has your complete earnings record, and the system identifies and uses the 35 years with the highest indexed amounts to calculate your Average Indexed Monthly Earnings (AIME). This ensures a standardized and objective calculation for everyone.