Your monthly Social Security retirement benefit is calculated using your highest 35 years of inflation-adjusted earnings, a specific formula, and your age when you begin receiving benefits.
The Social Security Administration (SSA) determines your retirement benefit by first calculating your average indexed monthly earnings (AIME) over your highest 35 years of earnings. These earnings are adjusted for inflation to reflect their value in today's dollars. Then, a formula is applied to your AIME to arrive at your primary insurance amount (PIA), which is the benefit you would receive at your full retirement age. Finally, your benefit amount is adjusted based on whether you start receiving benefits before, at, or after your full retirement age.
This information provides a general overview of how Social Security retirement benefits are calculated and does not constitute financial advice.
How does my spouse's age and benefit affect the best age for me to claim Social Security?
Your spouse's age and their own potential Social Security benefit can influence the optimal claiming age for you, especially if you are married. If your spouse is eligible for a higher benefit than you are, it might be advantageous for you to claim early (or vice versa) to maximize the combined household benefit or to ensure the higher earner delays as long as possible to maximize survivor benefits. Spousal benefits are also affected by claiming age. It's often beneficial to coordinate your claiming decisions with your spouse to ensure you both receive the most advantageous outcome over your lifetimes.