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The Social Security Calculations All Need to See

Kailey Hagen advises those that want to squeeze as much money as possible out of Social Security to educate themselves and weigh all options carefully.  She explains the first step in calculating benefits is figuring out your average indexed monthly earnings (AIME). That’s your average monthly earnings over your 35 highest-earning years with some adjustments for inflation. The federal government takes this and plugs it into the benefit formula that was in effect in the year you turned 62. For those born in 1960, the formula looks like this:

1. Multiply first $1,024 of your AIME by 90%.
2. Multiply amount between $1,024 and $6,172 by 32%.
3. Multiply any amount over $6,172 by 15%.
4. Total your results from the three steps above and round down to nearest $0.10.

Next is to reference a table showing a full retirement age of 67 and the 30% reduction in benefits if one claims at age 62 but a benefit that is 124% higher if one waits until age 70. Full article here.

The AMAC Foundation offers a free-to-the-public advisory service to all folks ageing into–or already in–Social Security. This service provides guidance in understanding the complexities of Social Security and the myriad rules and regulations associated with the process for claiming benefits, with NSSA-Certified Social Security Advisors available via email or telephone to discuss options. Learn more about this service via the Foundation’s website.

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