Benefit Calculation
How AIME and Bend Points Affect Primary Insurance Amount Calculation
Verified against SSA POMS as of August 26, 2026
The short answer
Primary Insurance Amount (PIA) is calculated using Average Indexed Monthly Earnings (AIME) and bend points. The PIA is derived by applying specific percentage rates to portions of the AIME as determined by annually adjusted bend points.
Understanding AIME and Its Role in PIA Calculation
The AIME, or Average Indexed Monthly Earnings, is essential in determining the Primary Insurance Amount (PIA). AIME is calculated using a worker's highest 35 years of earnings, after applicable earnings are indexed to account for changes in average wages over time. The resulting amount is converted to a monthly average (AIME) and used in the PIA formula.
RS 00605.021 View source ›Indexing Earnings for AIME
To provide a more meaningful comparison of earnings across a worker's career, Social Security adjusts earlier earnings to account for changes in average wages over time. These earlier earnings are wage-indexed through the year the worker reaches age 60 using a national Average Wage Index (AWI). Earnings beginning in the year the worker turns 60 use their actual value and are not indexed. After indexing, the highest 35 years are used to calculate the AIME.
Source: RS 00605.015
RS 00605.015Bend Points in Calculating Primary Insurance Amount
Bend points are used to segment AIME into portions for separate calculations. The SSA applies specific percentages: 90% of the AIME through the first bend point, 32% between the first and second bend point, and 15% for income above the second bend point. For 2026, the first bend point is set at $1,286 and the second bend point at $7,749.
The bend points used are based on the year the worker first becomes eligible for retirement benefits at age 62, regardless of when benefits are actually claimed. RS 00605.005
RS 00605.021 View source ›Applying Cost-of-Living Adjustments to PIA
Once the initial PIA is determined, applicable Cost-of-Living Adjustments (COLAs) are added beginning with the worker’s year of eligibility. COLAs are based on increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), helping benefits keep pace with inflation. RS 00601.120
RS 00601.120Frequently asked
What happens if a worker has fewer than 35 years of earnings?
Years with no earnings are included as zeros until 35 computation years are reached. These zero years lower the worker's AIME and PIA compared to a worker who has 35 years of actual earnings to base the calculation on.
Can working longer increase a Social Security benefit?
If new earnings are higher than one of the years currently included in the worker's 35-year calculation, the new year may replace the lower year and increase the benefits.
Is the PIA the amount a worker will actually receive?
The PIA is the amount of the worker's retirement benefit at full retirement age (FRA). Claiming before FRA will reduce the benefit, while delaying beyond FRA will increase the amount payable due to delayed retirement credits (DRCs).
Why were bend points created?
Bend points make the Social Security benefit formula progressive. The formula replaces a higher percentage of earnings for lower-wage workers and a smaller percentage for higher-wage workers.
How do COLAs impact the PIA?
COLAs adjust the PIA for inflation, increasing benefit amounts over time to maintain purchasing power. The COLA is determined by comparing the average CPI-W for the 3rd quarter (July-September) of the current year with the 3rd quarter average from the last year in which a COLA became effective.