How Social Security calculates your benefit
The Social Security Administration uses a three-step formula: average your highest 35 years of indexed earnings to get your AIME, apply the bend-point formula to get your PIA, then adjust the PIA based on the age you actually claim.
The PIA formula (2025 bend points)
For someone first eligible in 2025, the PIA is computed as:
- 90% of the first $1,226 of AIME
- 32% of AIME between $1,226 and $7,391
- 15% of AIME above $7,391
The bend points create a strongly progressive benefit: low earners receive a much higher replacement rate than high earners. A worker with a $30,000 AIME gets roughly 55% replacement; a worker at the $168,600 taxable maximum gets about 27%.
Claiming-age adjustments
If you claim before FRA (66–67 depending on birth year), benefits are reduced by 5/9 of 1% per month for the first 36 months and 5/12 of 1% per month for any additional months. If you delay past FRA, you earn delayed retirement credits of 8% per year up to age 70.
For the strategic considerations — including spousal benefits, survivor benefits, and the break-even analysis — see our Social Security claiming strategy guide.