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My mother is now approaching social security age and I would like to help her estimate her monthly payout. True or false, the social security payout is based on an average of your top twenty earning years?

Nov 05, 2012 by Jean from San Diego, CA in  |  Flag
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12 votes
Peter C. Karp Level 20

Jean,

Short answer = false.

Social Security is based off of your top 35 earning years. If you don't have 35 years of earnings then zeros count.

You can improve your social security payout by continuing to work and adding higher income earnings to your track record.

The answer is that social security is going to your top 35 years of earnings history.

Comment   |  Flag   |  Nov 06, 2012 from San Francisco, CA

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Jim Blankenship Level 17

False.

The Social Security benefit is based upon the average of the 35 highest earning years between 22 and 62 years of age, indexed against an average wage indexing series normalized to the worker's age 60. This average is then divided by 12 to come up with the Average Indexed Monthly Earnings (AIME) for the individual.

Then (hold onto your hat!), bend points are applied to the AIME. For 2013, this means that the first $791 of the AIME is multiplied by 90%; the amount between $791 and $4,768 is multiplied by 32%; any amount above $4,768 is multiplied by 15%. These three figures are added together, and the result is known as the Primary Insurance Amount, or PIA.

The PIA is the base figure for calculating benefits - this represents the amount that the individual would receive in a monthly benefit if he or she filed for Social Security benefits at Full Retirement Age (FRA) - age 66 for someone born between 1943 and 1954. If the individual files before FRA, the benefit will be reduced from the PIA figure, and if he or she delays filing for benefits to some date after FRA, the benefit received will be more than the PIA.

There are other factors that could reduce or eliminate Social Security benefits, but that's the basics.

I realize you asked what time it is and received the instructions for building a Mayan calendar - sorry, but I didn't want to oversimplify the answer. Suffice it to say that it's complicated, and you can get your PIA estimate from the Social Security Administration website - www.socialsecurity.gov/mystatement/.

jb

1 Comment   |  Flag   |  Nov 06, 2012 from New Berlin, IL
Jean

Thank you James! This is super helpful.

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Flag |  Nov 06, 2012 near San Diego, CA

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3 votes

Jean,

The Social Security website has tools to help you figure out what your monthly payout will be. Or, if your mother has some time to meet someone at a local SSA branch, I always like a face to face meeting to discuss all aspects of a major decision such as these benefits.

Just like James mentioned earlier...You can get your PIA estimate from the Social Security Administration website - www.socialsecurity.gov/mystatement/.

Thanks for your time. David

Comment   |  Flag   |  Nov 06, 2012 from Lititz, PA

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