Social Security is the strongest pillar of the U.S. retirement system. Nearly every American pays into the Social Security system, guaranteeing them a steady stream of benefits in retirement.
As of March 2023, the average monthly Social Security check is $1,833 for a retiree, $898 for a retired dependent spouse, $1,483 for a disabled worker, $1,711 for a widow and $1,070 for a surviving child.
Calculating your monthly Social Security benefit payment doesn’t necessarily require you to do any math and takes less than 15 minutes. Just go to the Social Security Administration’s website, create an account and follow the instructions you find there.
To help you understand the figures that SSA provides, we’ve rounded up the basics of how to calculate your Social Security benefits.
The Social Security Benefits Formula
Social Security calculates your benefits by tallying up the earned income you made in your top earning years and applying some simple arithmetic. To see your best earning years, create an SSA account and review your records.
SSA used to send people regular earnings statements. This practice has become sporadic over the years as budget cuts and better online services have made dispatching statements to working Americans cost prohibitive.
While logged in to your SSA account, navigate to your earnings history. At this point you’ll be given an estimate of your benefits, but if you’d like to calculate it manually, you’ll need to identify your top earning years.
Add up your earned income from each of the 35 years when you earned the most money and divide that amount by 420. The latter figure is the total number of your top earning months (35 x 12 months = 420). This gives you your Average Indexed Monthly Earnings (AIME).
Once you have your AIME, take the following steps.
- Multiply the first $1,115 of your AIME by 90%
- Multiply the portion of your AIME between $1,115 and $6,721 by 32%
- Multiply any remaining AIME over $6,721 by 15%
- Add up the products of steps one, two and three to get your Primary Insurance Amount (PIA)
Your PIA is the Social Security benefit you’d receive at your full retirement age. Your dependents can also receive a portion of your PIA, outlined in the family benefits section below.
Example of a Social Security Benefits Calculation
For the sake of a simple example, let’s say John earned $20,000 a year for exactly 35 years. His lifetime earnings were $700,000, making his AIME $1,666—that’s $700,000 divided by 420.
Over his lifetime John paid $43,400 into the system—that’s $700,000 x 6.2% OASDI tax, the payroll tax that funds Social Security.
Following the steps above, let’s calculate John’s PIA:
- $1,115 x 90% = $1,003
- $551 x 32% = $176
- Skip step three because John’s AIME isn’t high enough
- Add the products of steps one and two—$1,003 + $176—to get a PIA of $1,179
That may seem low, but remember that Social Security was originally created to be a system that prevents poverty in old age. It’s designed to give low-income workers closer to their original income level as they are less likely to have access to benefits like pensions or the ability to save for retirement while working and earning low wages.
In this example, John gets $487 less each month than he did while he was working. In 36 months of benefit payments, John will receive from Social Security what he paid into the system over his working career.
How to Calculate Family Social Security Benefits
Social Security pays benefits to dependents called auxiliary benefits. It also pays benefits to survivors after a primary beneficiary passes away.
You can see the benefit amount your dependents or survivors are eligible for on your SSA account. If you’d like to understand how that benefit is calculated, keep reading.
A qualified auxiliary spouse whether they’re still married to you or not is eligible for up to 50% of your PIA without your benefits being affected if 50% of yours is higher than their own PIA.
In addition to spouses, auxiliary children are eligible for up to 50% of your PIA. Auxiliary children are under the age of 18 while you are on benefits or adult children who became permanently disabled before the age of 22.
A surviving spouse is eligible for up to 100% of your PIA at their full retirement age, but this amount can be reduced or increased if you took retirement benefits early or late.
A surviving child is eligible for up to 75% of the deceased’s PIA.
Auxiliary and survivor benefits are subject to a family maximum benefit amount with the exception of divorced auxiliary spouses. Your family maximum benefit is listed on your MySSA account. To calculate it manually you’ll need to take the following steps with your PIA.
- Multiply the first $1,425 of your PIA by 150%
- Multiply the amount of your PIA between $1,425 and $2,056 by 272%
- Multiply the amount of your PIA between $2,056 and $2,682 by 134%
- Multiply the amount of your PIA over $2,682 by 175%
- Add up the products of steps one through four to get the PIA
Example of a Social Security Family Benefits Calculation
Let’s say Jane has a PIA of $2,400 when she passes away, leaving behind four young children. Each survivor is technically eligible for up to 75% of her PIA, which would be $1,800 a month, but those benefits are subject to a family maximum.
Following the steps above, let’s calculate Jane’s family maximum:
- $1,425 x 150% = $2,137
- $631 x 272% = $1,716
- $344 x 134% = $460
- Skip this step because Jane’s PIA isn’t over $2,682
- $2,137 + $1,716 + 460 = $4,313
Jane’s survivors would split her family maximum of $4,313, giving each of her four children $1,078 per month until they turn 18 or graduate from high school, whichever is later.
How to Calculate Social Security Spousal Benefits
If you’re married at retirement age or were previously married for at least 10 years and are not remarried when retiring, you may be eligible for an auxiliary spouse benefit. A spouse’s benefit will only pay you if it gives you more than you can get on your own earnings history. You don’t get to choose.
Because Social Security gives you a greater portion of benefits if you have low lifetime earnings, you’ll likely get more on your own than as a spouse if you worked outside of the home for several years, even if your spouse significantly out-earned you.
If you’re still married to your spouse, finding out what you could get as a spouse’s benefit is as easy (or hard) as getting them to create a MySSA account and dividing their PIA by 50%. That’s the most you can get as a spouse at your full retirement age. If you’re no longer married to your now former spouse but you’re still on good terms with them, you can ask them to do the same.
If you’re going through a divorce, you may be able to request the information through your attorney. If you’re already divorced and on bad terms with your ex, your only option may be to call your local social security office. You’ll need to provide your social as well as his and explain that you’d like a benefit estimate for what you’re eligible for as a spouse.
If your PIA is greater than $1,813, it’s impossible to get more as a spouse. The maximum Social Security PIA in 2023 is $3,627 (making half $1,813), but that is for someone who has made the maximum salary taxable by Social Security for 35 years of their life.
However, keep in mind that I had approximately 75,000 contacts with beneficiaries during my SSA career and I never came across a single person with a PIA over $2,800, so if your PIA is over $1,400 it’s a pretty safe bet you won’t get more as a spouse.
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