Skip to content
Social Security Online
Electronic Factsheet
Publications Home This is an archival or historical document and may not reflect current policies or procedures
SSA logo: link to Social Security Online home

How Your Retirement Benefit Is Figured

SSA Publication No. 05-10070, March 2000 (Recycle prior editions), ICN 467100 [View .pdfGet Accessible Adobe Acrobat Reader

 

As you make plans for your future, one of the questions you'll probably ask is, "How much will I get from Social Security?" There are several ways you can find out. Social Security sends a yearly statement to everyone age 25 or older who has worked under social security and does not yet receive benefits. You should receive a Social Security Statement every year about three months before your birthday.

You also can request a statement by calling Social Security and asking for a form SSA-7004, Request for Earnings and Benefit Estimate Statement, or by downloading the form from www.ssa.gov/online/ssa-7004.html on the Internet. Or you can calculate your benefit yourself using the programs available at www.ssa.gov/retire on the Internet.

Even with an estimate, however, many people still wonder exactly how their benefit is figured. Social Security benefits are based on earnings averaged over most of a worker's life-time. Your actual earnings are first adjusted or "indexed" to account for changes in average wages since the year the earnings were received. Then we calculate your average monthly indexed earnings during the 35 years in which you earned the most. We apply a formula to these earnings and arrive at your basic benefit, or "primary insurance amount" (PIA). This is the amount you would receive at your full retirement age, 65 or older, depending on your date of birth. The full retirement age for people born in 1938 is 65 and 2 months. This age will increase gradually each year until it reaches 67 for people born in 1960 or later.

 

Factors That Can Raise Or Lower Your Retirement Benefit

The monthly benefit you receive from Social Security may not be the basic benefit. Your actual benefit may be higher or lower than that amount if any of the following is true.

  • You receive benefits before your full retirement age.

    You can begin to receive Social Security benefits as early as age 62, but at a reduced rate. Your basic benefit will be reduced by a certain  percent for each month that you receive benefits before your full retirement age. The closer you are to your full retirement age when you begin receiving benefits, the greater your benefit amount.

  • You receive cost-of-living increases.

    You are eligible for cost-of-living benefit increases starting with the year you become 62. This is true even if you don't get benefits until 65 or even 70. Cost-of-living increases are added to your benefit beginning with the year you reach 62 up to the year you start getting benefits

  • You delay your retirement past your full retirement age.

    You may continue working past the  full retirement age and not begin to receive Social Security benefits. If you choose to do this, your benefit amount will be increased by a certain percent for every month that you are past your full retirement age but do not receive benefits. These increases are automatically added to your benefit until you reach age 70.

  • You are a government worker with a pension.

    If you also get or are eligible for a pension from work where you didn't pay Social Security taxes, usually a government job, a different formula is applied to your average monthly earnings. To find out how your benefit is figured, contact us and ask for a copy of A Pension From Work Not Covered By Social Security (Publication No. 05-10045).

 

For More Information

You can use the worksheet below to estimate your retirement benefit if you were born in 1938. You also can get information 24 hours a day by calling Social Security's toll-free number, 1-800-772-1213. Or visit us at www.ssa.gov on the Internet. People who are deaf or hard of hearing may call our toll-free TTY number, 1-800-325-0778, between 7 a.m. and 7 p.m. on business days.

 

Estimating Your Social Security Retirement Benefit

For Workers Born In 1938

This worksheet shows how to estimate the Social Security monthly retirement benefit you would be eligible for at age 62 if you were born in 1938. It also allows you to estimate what you would receive at age 65 and 2 months, your full retirement age, excluding any cost-of-living adjustments for which you may be eligible. If you continue working past age 62, your additional earnings could increase your benefit.

Step 1:
Enter your actual earnings in Column B, but not more than the amount shown in Column A. If you have no earnings, enter "0."
 
Step 2:
Multiply the amounts in Column B by the "index factors" in Column C, and enter the results in Column D. This gives you your "indexed earnings," or the approximate value of your earnings in current dollars.
 
Step 3:
Choose from Column D the 35 years with the highest amounts. Add these amounts.

$__________________
Step 4:
Divide the result from Step 3 by 420 (the number of months in 35 years). Round down to the next lowest dollar. This will give you your average indexed monthly earnings.

$__________________

Step 5:

  1. Multiply the first $531 in Step 4 by 90%.



$__________________

  1. Multiply the amount in Step 4 over $531 and less than or equal to $3,202 by 32%.

$__________________
  1. Multiply the amount in Step 4 over $3,202 by 15%.

$__________________
Step 6:
Add a, b and c from Step 5. Round down to the next lowest dollar. This is your estimated monthly retirement benefit at age 65 and 2 months, your full retirement age.

$__________________
Step 7:
Multiply the amount in Step 6 by 80%. This is your estimated monthly retirement benefit at age 62.

$__________________
 
Year

A. Maximum Earnings

B. Actual Earnings

C. Index Factor

D. Indexed Earnings

1951

$3,600

  

10.31

  
1952

3,600

  

9.71

  
1953

3,600

  

9.19

  
1954

3,600

  

9.15

  
1955

4,200

  

8.74

  
1956

4,200

  

8.17

  
1957

4,200

  

7.93

  
1958

4,200

  

7.86

  
1959

4,800

  

7.49

  
1960

4,800

  

7.20

  
1961

4,800

  

7.06

  
1962

4,800

  

6.73

  
1963

4,800

  

6.56

  
1964

4,800

  

6.31

  
1965

4,800

  

6.20

  
1966

6,600

  

5.84

  
1967

6,600

  

5.54

  
1968

7,800

  

5.18

  
1969

7,800

  

4.90

  
1970

7,800

  

4.67

  
1971

7,800

  

4.44

  
1972

9,000

  

4.05

  
1973

10,800

  

3.81

  
1974

13,200

  

3.59

  
1975

14,100

  

3.34

  
1976

15,300

  

3.13

  
1977

16,500

  

2.95

  
1978

17,700

  

2.73

  
1979

22,900

  

2.51

  
1980

25,900

  

2.31

  
1981

29,700

  

2.10

  
1982

32,400

  

1.99

  
1983

35,700

  

1.89

  
1984

37,800

  

1.79

  
1985

39,600

  

1.72

  
1986

42,000

  

1.67

  
1987

43,800

  

1.57

  
1988

45,000

  

1.49

  
1989

48,000

  

1.44

  
1990

51,300

  

1.37

  
1991

53,400

  

1.32

  
1992

55,500

  

1.26

  
1993

57,600

  

1.25

  
1994

60,600

  

1.22

  
1995

61,200

  

1.17

  
1996

62,700

  

1.11

  
1997

65,400

  

1.05

  
1998

68,400

  

1.00

  
1999

72,600

     

1.00

  

[Return to worksheet] [Return to Top]    

 
 Link to FirstGov.gov: U.S. Government portal Privacy Policy | Website Policies & Other Important Information | Site Map
Need Larger Text?