Step 1: qualify with 40 credits
You need 40 Social Security credits for retirement benefits. In 2026 one credit takes $1,890 of covered earnings, so $7,560 earns the yearly maximum of four; in 2027 a credit takes $1,970. Credits only decide eligibility. Earning more than 40 does not raise the benefit.
Step 2: average indexed monthly earnings
- Capped earnings: only earnings up to the taxable maximum count, $184,500 in 2026 and $192,300 in 2027.
- Indexing: earlier earnings are scaled up by the growth in the national average wage index. For someone eligible in 2027, each year's earnings are multiplied by the 2025 wage index divided by that year's index; earnings in 2025 and later count at face value.
- Best 35 years: the SSA takes up to 35 years with the highest indexed earnings, adds them and divides by the number of months, 420 for 35 years, rounding down to the dollar.
The result is your average indexed monthly earnings, or AIME.
Step 3: the PIA formula
The primary insurance amount, or PIA, is the benefit at full retirement age. It is 90 percent of the AIME up to the first bend point, 32 percent of the part between the two bend points, and 15 percent of anything above the second, rounded down to the next lower $0.10. The bend points depend on the year you turn 62:
| Year you turn 62 | First bend point | Second bend point |
|---|---|---|
| 2026 | $1,286 | $7,749 |
| 2027 | $1,340 | $8,077 |
With the 2027 bend points, for example:
| AIME | PIA | PIA as share of AIME |
|---|---|---|
| $2,000 | $1,417.20 | 71% |
| $4,000 | $2,057.20 | 51% |
| $6,000 | $2,697.20 | 45% |
| $10,000 | $3,650.20 | 37% |
| $14,966 | $4,395.10 | 29% |
The last row is the SSA's own example: someone with maximum taxable earnings every year from age 22 who turns 62 in 2027 has an AIME of $14,966 and a PIA of $4,395.10. The falling share in the last column is the formula's tilt toward lower earners.
Step 4: the claiming age and COLAs
The PIA is paid in full only at full retirement age. Claiming at 62 cuts it; the SSA gives 30 percent less for someone retiring at exactly 62 in 2027, and waiting past full retirement age adds delayed retirement credits, both covered in Social Security full retirement age. Cost-of-living adjustments, such as the 3.6 percent in Social Security COLA 2027, are tied to the year of eligibility: for someone who turns 62 in 2027, the SSA says the first COLA they could receive is the one effective for December 2027.
Spouses and survivors are paid from the same PIA, as spousal benefits and survivor benefits explain. For your own figures, your earnings record and estimates are in your my Social Security account; the retirement savings calculator shows how savings add to that income.
Frequently asked questions
How does Social Security calculate my benefit?
The SSA indexes your past earnings to wage growth, averages your highest 35 years into average indexed monthly earnings (AIME), and applies a three-part formula to get your primary insurance amount (PIA), the benefit at full retirement age. Claiming earlier or later then lowers or raises the monthly amount.
What are the bend points for 2027?
$1,340 and $8,077, for people who turn 62, become disabled or die in 2027, per the SSA. The PIA is 90 percent of AIME up to $1,340, plus 32 percent of AIME from $1,340 to $8,077, plus 15 percent above $8,077. For 2026 the bend points were $1,286 and $7,749.
How many years of earnings count?
Up to 35. The SSA picks the years with the highest indexed earnings, adds them up and divides by the number of months in those years, then rounds down to the dollar.
Do more Social Security credits mean a bigger benefit?
No. You need 40 credits to qualify for retirement benefits, and you can earn at most 4 a year ($1,890 of earnings per credit in 2026), but extra credits do not raise the benefit. The amount depends on your average earnings.
Is all of my income counted?
Only earnings up to the taxable maximum each year, $184,500 in 2026 and $192,300 in 2027, count toward Social Security tax and the benefit computation.
Sources
- Social Security Administration, Office of the Chief Actuary: Social Security benefit amounts (indexing earnings with the national average wage index, up to 35 years, AIME rounded down, the PIA formula, the maximum-earnings example with an AIME of $14,966 and a PIA of $4,395.10, 30 percent less at 62 in 2027)
- SSA Office of the Chief Actuary: Primary insurance amount (definition, the 90, 32 and 15 percent formula, the 2027 bend points of $1,340 and $8,077, rounding to the next lower $0.10)
- SSA Office of the Chief Actuary: Benefit formula bend points by year (2026: $1,286 and $7,749; 2027: $1,340 and $8,077)
- SSA Office of the Chief Actuary: Contribution and benefit base ($184,500 for 2026, $192,300 for 2027)
- SSA Office of the Chief Actuary: Quarter of coverage ($1,970 for 2027; at most 4 a year)
- SSA: Social Security credits (40 credits for retirement, $1,890 per credit and $7,560 for four in 2026, extra credits do not raise the benefit)
General information based on the sources above, not tax, legal or financial advice.