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Chapter 2: How are Benefits Determined?

Chapter 1: Enrollment

Two things determine the amount of your Social Security benefits.

  1. The amount you earn over your entire working career.
  2. The age at which you apply for benefits.

What Formula is Used to Calculate Benefits?

The formula used to calculate benefits includes determining your highest 35 years of earnings, no matter the chronological order of those earnings. They do not have to be consecutive years nor the most recent years. Those earnings are then indexed for inflation and averaged.

If you have not worked for at least 35 years, your benefit will be the sum and average of your total earnings from the years in which you did work.

Will My Benefits Ever Increase?

Yes! The Social Security administration determines appropriate increases in benefits by using COLAs, cost-of-living adjustments.

Bottom Line: The longer you work and the more you make, the more benefits you will receive.

Chapter 3: Four Categories for Calculating Benefits