Primary Insurance Amount (PIA) might not sound like a significant phrase most Americans need to know the meaning of, but millions of people wonder what their PIA is every year when they ask how much in monthly Social Security benefits can I receive each month?
The answer to that question is PIA, which is calculated by Social Security to determine a beneficiary’s monthly benefit amount.
PIA Definition
The primary insurance amount (PIA) is the benefit (before rounding down to next lower whole dollar) a person would receive if he/she elects to begin receiving retirement benefits at his/her normal retirement age. At this age, the benefit is neither reduced for early retirement nor increased for delayed retirement.
PIA Formula Bend Points
The PIA is the sum of three separate percentages of portions of average indexed monthly earnings. The portions depend on the year in which a worker attains age 62, becomes disabled before age 62, or dies before attaining age 62. For 2018 these portions are the first $895, the amount between $895 and $5,397, and the amount over $5,397. These dollar amounts are the bend points of the 2018 PIA formula. A table shows bend points, for years beginning with 1979, for both the PIA and maximum family benefit formulas.
PIA Formula
For an individual who first becomes eligible for old-age insurance benefits or disability insurance benefits in 2018, or who dies in 2018 before becoming eligible for benefits, his/her PIA will be the sum of:
(a) 90 percent of the first $895 of his/her average indexed monthly earnings, plus
(b) 32 percent of his/her average indexed monthly earnings over $895 and through $5,397, plus
(c) 15 percent of his/her average indexed monthly earnings over $5,397.
Social Security rounds this amount to the next lower multiple of $.10 if it is not already a multiple of $.10.
