Educational information, not individual financial advice.
Key Takeaways
Your Primary Insurance Amount (PIA) is the Social Security benefit you'd receive if you claimed at Full Retirement Age. It's the foundational number from which all other benefit calculations flow. Understanding the calculation is useful both for verifying SSA's numbers and for planning decisions about whether to keep working.
SSA considers your earnings subject to the Social Security payroll tax, up to each year's maximum taxable amount (wage base). The 2026 wage base is $184,500. Earnings above that don't count toward benefits.
Each year's earnings are indexed to account for wage inflation over your career. The SSA multiplies each year's earnings by the ratio of "national average wages in your year of age 60" to "national average wages in the earnings year." This converts each year's earnings into current wage terms.
Earnings in the year you turn 60 and later aren't indexed — they're used as-is.
Take your 35 highest indexed-earnings years. Sum them. Divide by 420 (the number of months in 35 years).
If you worked fewer than 35 years covered by Social Security, zeros are substituted for missing years. Each zero reduces AIME substantially — a year of $60,000 earnings replacing a zero moves your annual average up by $60,000 / 35 = $1,714, which over 420 months is a $4/month AIME increase.
The PIA formula uses two bend points that are updated annually:
2026 PIA formula (for workers first eligible in 2026):
This is progressive by design. Lower earners get a much higher "replacement ratio" (PIA / AIME) than higher earners. Someone with AIME of $2,000 has PIA = $1,157 + $228 = $1,385, a replacement ratio of about 69%. Someone with AIME of $8,000 has PIA = $1,157 + $2,068 + $38 = $3,263, a replacement ratio of about 41%.
For someone who earned at or above the wage base for 35+ years and claims at 70, the maximum benefit in 2026 is roughly $5,108/month ($61,296/year). At FRA, it's about $3,975/month. At 62, it's about $2,780/month.
Consider someone with 35 years of earnings averaging $75,000 in today's dollars (simplified):
Claim at 62: reduced to roughly $1,920/month. Claim at 70: increased to roughly $3,405/month (assuming FRA of 67).
Over a 20-year retirement (67–87), the difference between $1,920 and $3,405 compounds to hundreds of thousands of dollars in lifetime benefits.
Your PIA uses your highest 35 years. If you've already worked 35+ years, an additional year of work only raises PIA if that year's earnings exceed your lowest previously-counted year after indexing.
For someone who earned steadily and consistently, working year 36 might replace a low year from early career with a higher current year, increasing PIA modestly. For someone whose highest-earning years were recent and who now earns less, an additional year may not change PIA at all.
This is a common consideration for people thinking about working part-time in their 60s: the benefit accrual from additional work may be small.
The SSA maintains your lifetime earnings record. You can view it at ssa.gov by creating a My Social Security account. Check it annually — errors happen, and fixing them becomes harder as time passes.
Early claiming. Claiming before FRA reduces the benefit permanently.
Windfall Elimination Provision (WEP). If you receive a pension from work not covered by Social Security (e.g., some state/local government jobs), your PIA may be reduced using a modified formula.
Government Pension Offset (GPO). Can reduce spousal or survivor benefits if you also receive a pension from non-covered work.
Both WEP and GPO are controversial; legislation has repeatedly been introduced to eliminate them, but has not passed as of early 2026.
Horizons calculates your estimated PIA using your actual earnings history (from your SSA record) or an estimated average income. The engine then applies the appropriate claim-age factor and COLA adjustments month by month to produce your Social Security benefit stream in the forecast.
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