The standard formula for figuring Social Security benefits averages a person’s pre-retirement earnings by dividing total pre-retirement earnings by 35 years, then dividing that amount by 12 to find the average monthly earnings (AME). The dollar amounts in the formula vary yearly according to inflation.What are SSA retirement benefits?
One of the benefits Social Security provides is a monthly retirement benefit. This benefit is based on your salary during your working years, similar to a pension. The Social Security Administration (SSA) also applies an annual COLA to payments, similar to public pensions.How do you estimate your retirement?
To determine how much money you will need to retire, you must estimate your retirement expenses. Here's how you come up with an estimate. A good way to begin to estimate retirement expenses is to use your current monthly take-home pay as a starting place, and then ask a few additional questions.How retirement benefits are calculated by Social Security?
So, in short, the process used to determine your actual Social Security retirement benefit is as follows: Your average indexed monthly earnings, or AIME, are calculated as the average of your 35 highest-earning inflation-indexed years, divided by 12.