How Social Security Is Calculated: AIME, PIA and Bend Points for 2027

Social Security is calculated from your earnings in three steps. First, SSA indexes each year’s pay to a recent wage level. Next, it averages your highest 35 years into your average indexed monthly earnings (AIME). Then it puts that average through a formula that gives your primary insurance amount (PIA), the benefit at full retirement age. For people turning 62 in 2027, the PIA is 90% of the first $1,340 of AIME, plus 32% of the AIME up to $8,077, plus 15% of the rest, says SSA’s notice for 2027. The age you start then lowers or raises the PIA.

Your average indexed monthly earnings (AIME) is the average of your highest 35 years of indexed earnings, by the month, rounded down to the dollar. The primary insurance amount (PIA) is the monthly benefit you would get by starting your retirement benefits at your full retirement age, neither cut for starting early nor raised for waiting (SSA). Benefits for a spouse, children or survivors on your record are worked out from it too.

1. Your pay, every yearEach year’s earnings that paid Social Security tax
2. CappedOnly pay up to each year’s taxable maximum counts ($192,300 in 2027)
3. IndexedPay before the year you turn 60 is lifted to that year’s wage levels
4. Best 35 yearsThe 35 highest years count; missing years count as zero
5. AIMETheir total ÷ 420 months, down to the dollar
6. PIA90% of the first $1,340, 32% up to $8,077, 15% above
7. COLAsEvery cost-of-living increase from the year you turn 62
8. Your age at the startLess before full retirement age, more up to 70
9. Your checkRounded down to the dollar

Below, each step is worked through with SSA’s own two examples for 2027 (SSA). Case A was born in 1965 and starts at 62 in 2027. Case B was born in 1960, earned the maximum every year from 1987, and starts at 67 in 2027. To run the same steps on your own record, use the Social Security calculator.

Which earnings count?

Earnings that paid Social Security tax count, each year up to that year’s taxable maximum: $192,300 in 2027 and $184,500 in 2026 (SSA). Wages count, and so do net earnings from self-employment that are subject to Social Security tax (20 CFR 404.1096). Every year after 1950, up to the year before you start benefits, can be used (20 CFR 404.211). Pay above the maximum still pays Medicare tax, but it does not count toward Social Security.

Case A earned $17,229 in 1987, at 22, and $79,009 in 2026. Case B earned the maximum each year from 1987 to 2026, from $43,800 in 1987 up to $184,500 in 2026 (SSA).

How does SSA index your earnings?

SSA multiplies each year’s earnings by the growth in the national average wage index from that year to your indexing year. Your indexing year is the year you turn 60: “the second year before” the year you reach 62, in the words of the rule (20 CFR 404.211). For case A, born in 1965, that is 2025, when the index was $72,800.33 (SSA). Earnings in and after the indexing year count as they are. Each indexed amount is rounded to the cent.

In case A, the $17,229 earned in 1987 is multiplied by 3.9508, the 2025 index divided by the 1987 index. That makes $68,069 in 2025 wage terms (SSA). The 2025 and 2026 earnings count as they are. Without indexing, a dollar earned in 1987 would weigh the same as one earned in 2025, though the average wage roughly quadrupled between those years.

How does SSA pick your 35 years and work out the AIME?

SSA adds up your 35 highest indexed years, divides the total by 420, the number of months in 35 years, and rounds down to the dollar (20 CFR 404.211). The 35 comes from the rule: count the years from the year you turn 22 to the year before you turn 62, which is 40 for most people, and drop 5. If you worked fewer than 35 years, years with no earnings fill the gap.

Case A worked the 40 years from 1987 to 2026. Its 35 highest indexed years add up to $2,550,252. Divided by 420 that is $6,072.03, so the AIME is $6,072. Case B’s highest 35 years total $4,974,097, for an AIME of $11,843 (SSA).

The 5 dropped years matter. A year of low pay, a year of school or a year at home with a child can fall outside the 35. With more than 35 years of work, a strong late year pushes out a weak early one.

How does the PIA formula work?

The bend points are the two amounts of AIME where the formula’s share drops: it pays 90% of your AIME up to the first, 32% from there to the second, and 15% above it (SSA). You use the bend points of the year you turn 62: $1,340 and $8,077 for 2027 (SSA). The total is rounded down to the dime (20 CFR 404.212). Drag the AIME below to see the slices fill.

Case A turns 62 in 2027. 90% of $1,340 is $1,206.00. 32% of the $4,732 between $1,340 and $6,072 is $1,514.24. Together that is $2,720.24, rounded down to a PIA of $2,720.20 (SSA). Case A’s AIME never reaches the second bend point, so nothing is paid at 15%.

Your AIME, sorted into your full benefit

AIME poured in$5,000a month

First $1,340$1,340 in

90¢ per $1

pays $1,206.00

$1,340 to $8,077$3,660 in

32¢ per $1

pays $1,171.20

Over $8,077$0 in

15¢ per $1

pays $0.00

$2,377.20Full benefit (PIA)47.5% of the AIME, down to the dime

Pour a different AIME: drag the slider or the hopper$0$15,000

An AIME of $5,000 gives a full retirement benefit (PIA) of $2,377.20 a month: 47.5% of the average monthly earnings it is based on.

The bend points grow with average wages. SSA multiplies the 1979 amounts, $180 and $1,085, by the growth in the wage index from 1977 to 2025. That gives $1,339.96 and $8,076.98, rounded to $1,340 and $8,077 (SSA). The bends make the formula replace a bigger share of a low average than of a high one. Benefits by salary shows what that means at each level of pay.

Why do the years you turn 60 and 62 matter?

The year you turn 60 fixes the wage level your pay is indexed to. The year you turn 62, your eligibility year, fixes the bend points and the family maximum formula used for you, even if you start benefits years later (20 CFR 404.212). Your cost-of-living increases also start in that year.

Social Security counts you as reaching an age on the day before your birthday (20 CFR 404.102). So someone born on January 1, 1965 reaches 62 on December 31, 2026. They get the formula for 2026, not 2027, and the increase for 2027 too.

How are cost-of-living increases added?

From the December of the year you turn 62, each cost-of-living increase (COLA) is applied to your PIA, and each result is rounded down to the dime (20 CFR 404.212, 404.275). You get them whether or not you have started benefits. The increase that takes effect in December 2026, paid from January 2027, is 3.6% for everyone who turned 62 before 2027. People who turn 62 in 2027 start without it (SSA).

Case B shows the steps. Born in 1960, case B turned 62 in 2022, so SSA uses the 2022 bend points, $1,024 and $6,172 (SSA). 90% of $1,024, plus 32% of the AIME between $1,024 and $6,172, plus 15% of the AIME above $6,172 comes to $3,419.61: a PIA of $3,419.60. The increases that took effect each December from 2022 to 2026, 8.7, 3.2, 2.5, 2.8 and 3.6 percent, each rounded down to the dime, bring it to $4,187.40. Starting at full retirement age, 67, in 2027, case B gets $4,187 a month (SSA).

The increases on the PIA follow you even if you start early. The cut for your age is worked out again on each new PIA, at the same percentage (20 CFR 404.413).

How does the age you start change the amount?

At full retirement age you get the PIA; start earlier and it is cut, start later and it grows. For anyone born in 1960 or later, full retirement age is 67; SSA counts a January 1 birthday with the year before. Starting at 62 pays 70% of the PIA, and starting at 70 pays 124% (SSA). Each month before full retirement age costs 5/9 of 1% for the first 36 months and 5/12 of 1% for each month beyond that. The cut is rounded up to the dime (20 CFR 404.410). Each month after full retirement age, up to 70, adds 2/3 of 1% (20 CFR 404.313).

SSA’s case A starts 60 months early and gets 70% of its PIA: $1,904 a month (SSA). Sixty months is the most for someone whose full retirement age is 67. A benefit at 62 starts in the first month you are 62 for the whole month (20 CFR 404.311). Only people born on the 1st or 2nd of a month can start in their birthday month; everyone else starts in the month after. Someone born on June 15, 1965 can start in July 2027 at the earliest, 59 months early, and gets 70.4% of the PIA. See full retirement age and when to claim.

How is each amount rounded?

SSA rounds at each step, mostly down:

• indexed earnings: to the nearest cent (20 CFR 404.211);
• AIME: down to the whole dollar (same rule);
• PIA: down to the dime (20 CFR 404.212);
• each cost-of-living increase: the raised PIA down to the dime (20 CFR 404.275);
• an early start: the cut up to the dime (20 CFR 404.410);
• a later start: the increase down to the dime (20 CFR 404.313);
• the monthly benefit: down to the whole dollar, after all other deductions, such as a Medicare premium (20 CFR 404.304).

Each step moves the result by cents, or at most about a dollar. A calculator that skips them can end up a few dollars off.

What is the family maximum?

The family maximum caps the total paid each month on one worker’s record: to the worker and the family members paid on it, such as a spouse and children (20 CFR 404.403). For a worker turning 62 in 2027, it is 150% of the first $1,712 of the PIA, 272% of the PIA up to $2,471, 134% up to $3,223, and 175% above that, rounded down to the dime (SSA). For case A’s PIA of $2,720.20, that comes to $4,966.40 a month.

The worker’s own benefit is never cut for it. When the family’s benefits add up to more, each of the others is cut in proportion (20 CFR 404.404). Benefits paid to an ex-spouse do not count toward the limit (SSA). More in spousal benefits and survivor benefits.

Figures checked October 29, 2026.

Questions people ask

Is Social Security based on the highest 35 years?

Yes. SSA averages your 35 highest years of indexed earnings, and counts zeros if you worked fewer than 35 (20 CFR 404.211). A later year can replace a lower one if it raises your PIA.

What are the Social Security bend points for 2027?

$1,340 and $8,077, for people who turn 62 in 2027. For 2026 they were $1,286 and $7,749 (SSA).

How is Social Security calculated for married couples?

Each spouse gets a benefit worked out from their own record. A spouse can get up to half of the other’s PIA instead, if that is more than their own benefit (SSA).

How is Social Security calculated when a spouse dies?

A widow or widower can get a benefit on the late spouse’s record. SSA says it starts at 71.5% of the spouse’s benefit at 60 and can reach 100% at full retirement age for survivors (SSA).

How is Social Security calculated for self-employed people?

With the same formula. Net earnings from self-employment count up to the same taxable maximum (20 CFR 404.1096). Self-employed people pay both halves of the tax: 15.30% for Social Security and Medicare together in 2027 (SSA).

How is Social Security calculated at age 62?

The PIA is worked out with the formula for the year you turn 62, then cut for each month before full retirement age. With a full retirement age of 67, the most you can be cut is to 70% of the PIA (SSA).

Updated November 7, 2026