SSA logo: link to Social Security Online home700. Primary Insurance Amount (PIA) as Basic Figure

In this Chapter, “first eligibility” means the year when you reach age 62 or when you begin a period of disability. "Entitlement" means that you meet all of the requirements for receiving benefits. This includes the filing of an application.

700.1 How do you figure your cash benefits?

The Primary Insurance Amount (PIA) is the figure used to determine almost all of your cash benefit amounts. These benefit amounts include your monthly benefits as a worker and benefits for your dependents and survivors. The PIA is based on your taxable earnings (see §713) averaged over the number of years you worked. This produces a monthly benefit that partially replaces the loss of your income because of retirement, disability, or death. The lump-sum death payment (see §428) is $255; however, it may be less if your PIA was computed under a totalization agreement. (See §107.) The only cash benefit not based on the PIA is the special monthly payment made to uninsured persons age 72 or over discussed in §346.

700.2 How does SSA determine your average earnings?

There are generally two methods for determining average earnings. The method we use depends upon when you are first eligible (or when you die if death occurs before you are eligible):

  1. First eligibility or death before 1979; or

  2. First eligibility or death in 1979 or later.

700.3 What is the PIA under first eligibility or death prior to 1979?

We base your PIA on your Average Monthly Earnings (AME). We use the actual earnings reported by your employers or reported by you as a self-employed worker. This method may also apply in limited circumstances for individuals whose first eligibility is after 1978 as defined in §706.2.

700.4 What is the PIA under first eligibility or death in 1979 or later?

We base your PIA on the Average Indexed Monthly Earnings (AIME). We index your earnings from 1951, through the second year before the year of your first eligibility or death, whichever comes first. “Indexed” means that your earnings are adjusted to put them in proportion to the earnings level of all workers for those years. Your actual reported earnings are used to compute the AIME for the years beginning with the year before your first year of eligibility.

This example shows how to calculate the PIA for an individual retiring at age 65 in the year 2000. Assume Mr. Francis retires at age 65 in 2000. The significant year for setting the index factor is 1995, which is the second year before the year in which he reached age 62. Average wages of all workers in 1995 are compared to average wages of all workers in each year after 1950. If Mr. Francis' earnings were $3,000 in 1951 and the wages of all workers in 1995 were 8.8160978 times higher than the average wages of all workers in 1951, (the index 1951 factor is 8.8160978). Therefore, the 1951 indexed earnings for Mr. Francis are $26,536.72 ($3,000 x 8.8260978). Index factors apply for each year to be indexed, depending on the ratio of average wage levels for all workers in each year compared to 1995. It is equally true that a different year of attainment of age 62 would change the index factors. In Mr. Francis' situation, earnings in years beginning with 1996 will not be indexed but will be the actual amounts reported.

700.5 What if an insured worker dies before reaching age 62 in 1979 or later?

If an insured worker dies before age 62, his or her earnings are indexed differently to compute the PIA on which widow(er)'s benefits are based, if this results in a higher benefit. In this case, the worker's earnings are indexed up to and including the earlier of the following:

  1. The year in which the widow(er) reaches age 60; or

  2. The second year before the widow(er) becomes eligible, but never earlier than the second year before the worker died.

700.6 Why are adjusted earnings used instead of actual earnings in computing the PIA?

Adjusted earnings are used instead of actual earnings to reduce the difference between a younger worker's average income and an older individual's average earnings. If not, the younger worker's benefit amounts would be based on fewer, more recent years of earnings while the older worker's average earnings would include lower amounts that were earned and taxable in earlier years of Social Security coverage.

700.7 Are there exceptions for individuals who have worked several years at low earnings?

A special minimum PIA is possible for workers who have worked under Social Security for many years at low earnings. (See §717.) At least 11 years of working at low earnings are required. Additional years are usually needed to bring the amount of the special minimum PIA to more than the PIA computed under the methods explained in subsections 700.3 - 700.5 above.

Last Revised: Jul. 30, 2007