Social Security retirement income is based on two things: how much you earned over your working life, and how old you are when you start collecting. The Social Security Administration takes your highest 35 years of earnings, adjusts the older years for wage growth, runs the average through a formula that replaces a larger share of income for lower earners than for higher ones, and then raises or lowers that result depending on whether you claim as early as 62, at your full retirement age, or as late as 70.
You Have to Qualify First: 40 Work Credits
Before any calculation happens, you need to be insured. That means 40 work credits, which comes out to roughly 10 years of covered employment. In 2026, you earn one credit for every $1,890 in wages or net self-employment income, up to four credits a year.1Social Security Administration. Quarter of Coverage Credits stay on your record permanently. Once you hit 40, you’re eligible; the size of the check then depends entirely on your earnings, not on how long it took you to get there.2Social Security Administration. How You Earn Credits
Your Earnings History, Reduced to One Number
The calculation starts with your complete earnings record. Each year of past wages is indexed to account for the fact that the overall economy pays more today than it did decades ago. A dollar earned in 1985 doesn’t represent the same slice of the economy as a dollar earned in 2024, so the older year gets scaled up.3Social Security Administration. Benefit Formula Bend Points
The scaling uses the national average wage index. Each past year’s earnings are multiplied by the ratio of the wage index in your “base year” (the year you turn 60) to the wage index in that past year. For someone turning 60 in 2024, the base year index is $69,846.57; earnings from 1986, when the wage index was $17,321.82, get multiplied by about 4.03.4Social Security Administration. Retirement Benefit Computation Anything you earned in the base year or later counts at its actual dollar value with no adjustment.5Social Security Administration. Average Wage Index Factors
Once every year is indexed, the Social Security Administration picks the 35 highest, adds them together, and divides by 420 (the months in 35 years). That gives you your Average Indexed Monthly Earnings, or AIME.4Social Security Administration. Retirement Benefit Computation
If you worked fewer than 35 years, the missing years are filled with zeros, and the average drops. Even with a full 35 years, low-earning years pull the average down. Continuing to work and replacing a zero (or a low year) with a higher one will raise your AIME and your eventual benefit.6Social Security Administration. If You Stop Working
The Formula That Turns AIME Into a Monthly Check
Your AIME feeds into a progressive formula that produces the Primary Insurance Amount (PIA), which is what you’d receive if you claimed at your full retirement age. Three percentages apply to successive slices of your AIME, separated by dollar thresholds called bend points that are updated each year for wage growth.7Social Security Administration. Bend Points
For workers first becoming eligible in 2026, the PIA equals:
- 90% of the first $1,286 of AIME
- 32% of AIME between $1,286 and $7,749
- 15% of AIME above $7,749
The result is rounded down to the next lower multiple of ten cents.8Social Security Administration. Primary Insurance Amount Formula Because the first slice of earnings is replaced at 90 cents on the dollar and the top slice at only 15 cents, Social Security replaces a much larger share of pre-retirement income for lower-wage workers than for high earners. A worker becoming eligible in 2026 who hit the taxable maximum every year would have an AIME of $14,358 and a PIA of $4,216.90.3Social Security Administration. Benefit Formula Bend Points
Only Earnings Up to the Annual Cap Count
Wages above a yearly ceiling neither get taxed for Social Security nor count in the benefit formula. In 2026, that ceiling is $184,500. Earn a million dollars in a year and only $184,500 goes on your Social Security record, and only that amount is subject to the 6.2% employee payroll tax (matched by your employer).9Social Security Administration. Contribution and Benefit Base The cap moves each year with the national average wage index.10Social Security Administration. Maximum Taxable Earnings Self-employment earnings feed the calculation the same way wages do, subject to the same ceiling.11Social Security Administration. If You Are Self-Employed
When You Claim Changes What You Get
Full Retirement Age
Your full retirement age is when you receive 100% of your PIA. It depends on birth year. For anyone born between 1943 and 1954, it’s 66. It then climbs in two-month steps for later birth years, reaching 67 for anyone born in 1960 or later.12Social Security Administration. Full Retirement Age
Claiming Early
You can start benefits as early as 62, but the reduction is permanent. Someone with a full retirement age of 67 who claims at 62 receives 70% of their PIA — a 30% cut. The math is 5/9 of 1% per month for the first 36 months before full retirement age, then 5/12 of 1% for each additional month.13Social Security Administration. Early Retirement Reduction Waiting a few extra months buys back a slice of the reduction, but reaching full retirement age doesn’t restore the cut you locked in.14Social Security Administration. Benefits by Year of Birth – 1960 and Later
Delaying Past Full Retirement Age
Every month you wait beyond full retirement age, up to age 70, adds delayed retirement credits to your benefit. For anyone born in 1943 or later, that’s 8% per year, or 2/3 of 1% per month.15Social Security Administration. Delayed Retirement Credits Waiting past 70 buys nothing extra.16Social Security Administration. Effect of Early or Late Retirement For 2026, the maximum monthly check for a worker claiming at full retirement age is $4,152; for a worker who held out until 70, it’s $5,181.17Social Security Administration. 2026 Social Security Changes Fact Sheet
What Can Change the Check After It Starts
Annual Cost-of-Living Adjustments
Your benefit is adjusted each year for inflation. The COLA is based on the change in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of one year to the third quarter of the next. If the index doesn’t rise, there’s no COLA that year.18Social Security Administration. Cost-of-Living Adjustment Information The 2026 COLA is 2.8%.17Social Security Administration. 2026 Social Security Changes Fact Sheet
Working While Collecting Before Full Retirement Age
If you claim early and keep working, an earnings test can withhold part of your check. In 2026, $1 is withheld for every $2 you earn above $24,480. In the year you reach full retirement age, the threshold jumps to $65,160 (counting only earnings before the month you hit that age), and the withholding drops to $1 for every $3 over the limit.19Social Security Administration. Getting Benefits While Working Once you’re past full retirement age, there’s no earnings limit at all, and Social Security recalculates your benefit upward to give you credit for the months that were withheld.20Social Security Administration. Retirement Earnings Test Exempt Amounts
Federal Income Tax on Your Benefits
Depending on your other income, up to 85% of your Social Security check may be subject to federal income tax. The test uses “combined income”: your adjusted gross income, plus any tax-exempt interest, plus half of your Social Security benefits. For single filers, up to 50% of benefits can be taxable with combined income between $25,000 and $34,000, and up to 85% above $34,000. For married couples filing jointly, the thresholds are $32,000 and $44,000.21IRS. Social Security Benefits May Be Taxable You can have taxes withheld directly from your monthly payment through your my Social Security account.22Social Security Administration. Income Taxes and Your Social Security Benefit
How to See Your Own Numbers
The simplest way to see what your benefit will be is a my Social Security account at ssa.gov/myaccount. It shows your posted earnings history, the credits you’ve accumulated, and estimated benefits at 62, at your full retirement age, and at 70. You can also change the assumptions about future earnings to see what working a few more years, or earning more, would do to the projection.23Social Security Administration. Get Your Benefit Estimate For more detailed scenarios, the SSA also publishes standalone calculators, including a detailed calculator that can model disability and survivor outcomes alongside retirement.24Social Security Administration. Benefit Calculators Checking the earnings record itself matters: if a year is missing or reported wrong, it will pull your average down when the formula runs.