Updated: Sep 9, 2026
Key Takeaways
- Select the highest years after wage indexing, not before.
- The 2026 bend points are $1,286 and $7,749.
- Eligible COLAs after age 62 can affect a benefit even before claiming.
Follow the calculation in order
- Start with earnings covered by Social Security, limited by each year's taxable maximum.
- Apply SSA's wage-indexing rules. Earnings before the indexing year are adjusted using national average wages; later earnings are treated under SSA's rules. This is not consumer-price inflation indexing.
- Select the highest 35 years of indexed earnings. Selecting the highest nominal years first can give the wrong result. Use zero years if fewer than 35 years are available.
- Divide their total by 420 months and round down to the next whole dollar to obtain average indexed monthly earnings, or AIME.
- Apply the bend points for the year of eligibility, generally the year the worker reaches 62, to find the primary insurance amount, or PIA.
- Apply relevant COLAs, claiming-age adjustments, and SSA's payment-rounding rules.
Get the Weekly Updates newsletter
Sign up for the latest financial advice, health news, and lifestyle updates.
Worked example for someone first eligible in 2026
Assume AIME is $5,000. The 2026 formula applies 90% to the first $1,286, 32% to earnings above $1,286 through $7,749, and 15% above $7,749.
| Portion of AIME | Calculation | Amount |
|---|---|---|
| First $1,286 | $1,286 × 90% | $1,157.40 |
| Remaining $3,714 | $3,714 × 32% | $1,188.48 |
| Above $7,749 | None in this example | $0 |
| Total before PIA rounding | $1,157.40 + $1,188.48 | $2,345.88 |
Rounding the PIA down to the next dime gives $2,345.80. This is before later COLAs, early or delayed claiming adjustments, and final payable-benefit rounding. It is not necessarily the bank deposit.
Why the eligibility year matters
A person who reaches 62 in another year uses that year's bend points, even if claiming in 2026. Do not apply the newest formula directly to every retiree's earnings. See SSA's formula table for the appropriate year.
COLAs are separate from wage indexing. Eligible COLAs after age 62 apply even when the worker has not started benefits, so they can affect the initial payment for someone who delays claiming. Additional covered work can also lead to a recomputation if it replaces a lower earnings year.
Use the formula to check understanding
This example explains the process; SSA's account tools are more practical for a personal estimate with a complete earnings history. Follow the estimate walkthrough and use the claiming-age comparison to distinguish changes from age, earnings, and COLAs.
Frequently Asked Questions
Do I choose my 35 highest salaries first?
Does delaying mean missing COLAs before claiming?
ARTICLE SOURCES
Retire Companion requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
- Social Security Administration. Benefit formula and bend points
- Social Security Administration. Computing a retired-worker benefit
- Social Security Administration. Retirement benefit estimates
Was this article helpful?
Your feedback helps us improve our resources.
