Most people who file for retirement, disability or survivor’s benefits from Social Security are curious to know what their benefit amount each month will be. Social Security created its benefit formula based on how much a worker earned while working and how long the worker paid into Social Security. Below is the precise way Social Security comes up with everyone’s benefit amount.
Primary Insurance Amount
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 2019 these portions are the first $926, the amount between $926 and $5,583, and the amount over $5,583. These dollar amounts are the “bend points” of the 2019 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 2019, or who dies in 2019 before becoming eligible for benefits, his/her PIA will be the sum of:
(a) 90 percent of the first $926 of his/her average indexed monthly earnings, plus
(b) 32 percent of his/her average indexed monthly earnings over $926 and through $5,583, plus
(c) 15 percent of his/her average indexed monthly earnings over $5,583.
We round this amount to the next lower multiple of $.10 if it is not already a multiple of $.10.
