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How to Calculate Social Security Benefits - A Step by Step Guide

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How to Calculate Social Security Benefits - A Step by Step Guide
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The amount of Social Security benefits you receive depends on the following factors:

  • How long you work
  • How much you make each year
  • Inflation
  • What age you begin taking your benefits

In this step-by-step series, we’ll show you how these factors affect your benefit amount. There is a three step process to use to calculate the amount of Social Security benefits you will receive.

Step 1: Use your earnings history to calculate your Average Indexed Monthly Earnings (AIME)
Step 2: Use your AIME to calculate your Primary Insurance Amount (PIA)
Step 3: Use your PIA and Adjust it for the Age You Will Begin Benefits

Let's take a detailed look at Step 1: How to Calculate Your Average Indexed Monthly Earnings.

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