Your Retirement Benefit:

2006
How It Is Figured

A s you make plans for your retirement,

you may ask, “How much will I get from
Social Security?” There are several ways you
benefits until your full retirement age or even
70. Cost-of-living increases are added to your
benefit beginning with the year you reach 62
can find out. Social Security sends a yearly up to the year you start getting benefits.
Social Security Statement to everyone age • You delay your retirement past your full
25 or older who has paid Social Security taxes retirement age.
and has not yet received benefits. You should Social Security benefits are increased by a
receive a Statement about three months before certain percentage (depending on your date
your birthday each year. of birth) if you delay receiving benefits until
You also can request a Statement by past your full retirement age. If you do so,
calling Social Security and asking for a your benefit amount will be increased until
form SSA-7004, Request for Social Security you reach age 70.
Statement, or by downloading the form at • You are a government worker with a pension.
www.socialsecurity.gov/online/ssa-7004.html
on the Internet. Or, you can use the Benefits If you also get or are eligible for a pension
Planner at www.socialsecurity.gov/planners to from work where you did not pay Social
estimate your benefit. Security taxes (usually a government job),
a different formula is applied to your average
Many people wonder how their benefit is indexed monthly earnings. To find out
figured. Social Security benefits are based on how your benefit is figured, contact
your lifetime earnings. Your actual earnings are Social Security and ask for Windfall
adjusted or “indexed” to account for changes in Elimination Provision (Publication
average wages since the year the earnings were No. 05-10045) or review it online at
received. Then Social Security calculates your www.socialsecurity.gov/pubs/10045.html.
average indexed monthly earnings during the
35 years in which you earned the most. We You may find a more detailed explanation
apply a formula to these earnings and arrive about how your retirement benefit is calculated
at your basic benefit, or “primary insurance in the Annual Statistical Supplement, 2004,
amount” (PIA). This is how much you would Appendix D. The publication is available on the
receive at your full retirement age—65 or older, Internet at www.socialsecurity.gov/policy/docs/
depending on your date of birth. statcomps/supplement/2004 or you can order
a paper copy by writing to the Government
On the back of this page is a worksheet you Printing Office, P.O. Box 371954, Pittsburgh,
can use to estimate your retirement benefit if PA 15250-7954.
you were born in 1944. It is only an estimate; for
specific information about your situation, you
should talk with a Social Security representative. Contacting Social Security
For more information and to find copies
Factors that can change the amount of our publications, visit our website at
of your retirement benefit www.socialsecurity.gov or call toll-free,
1-800-772-1213 (for the deaf or hard of hearing,
• You choose to get benefits before your full call our TTY number, 1-800-325-0778). We
retirement age.
can answer specific questions from 7 a.m. to 7
You can begin to receive Social Security p.m., Monday through Friday. We can provide
benefits as early as age 62, but at a reduced information by automated phone service 24
rate. Your basic benefit will be reduced by a
hours a day.
certain percentage if you retire before reach-
ing full retirement age. We treat all calls confidentially. We also
want to make sure you receive accurate and
• You are eligible for cost-of-living benefit
courteous service. That is why we have a
increases starting with the year you become
second Social Security representative monitor
62. This is true even if you do not get
some telephone calls.
(over)
w w w. s o c i a l s e c u r i t y. g o v Your Retirement Benefit: How It Is Figured
 Estimating your Social Security retirement benefit
For workers born in 1944 (people born in 1944 become age 62 in 2006 and are eligible for a benefit)
This worksheet shows how to estimate the Social Security monthly retirement benefit you would be eli-
gible for at age 62 if you were born in 1944. It also allows you to estimate what you would receive at age 66,
your full retirement age, excluding any cost-of-living adjustments for which you may be eligible. If you con-
tinue working past age 62, your additional earnings could increase your benefit. People born after 1944 can
use this worksheet, but their actual benefit may be higher due to additional earnings and benefit increases.
If you were born before 1944, please go online at www.socialsecurity.gov or contact us for your worksheet.
Step 1: Enter your actual earnings in Column B, but Step 5: a. Multiply the first $656 in Step 4 by 90%.
not more than the amount shown in Column A. If $_________
you have no earnings, enter “0.” b. Multiply the amount in Step 4 over $656 and less
Step 2: Multiply the amounts in Column B by the than or equal to $3,955 by 32%. $_________
index factors in Column C, and enter the results in c. Multiply the amount in Step 4 over $3,955 by 15%.
Column D. This gives you your indexed earnings, $_________
or the approximate value of your earnings in cur-
Step 6: Add a, b and c from Step 5. Round down to
rent dollars.
the next lowest dollar. This is your estimated
Step 3: Choose from Column D the 35 years with monthly retirement benefit at age 66, your full
the highest amounts. Add these amounts. $_________ retirement age. $_________
Step 4: Divide the result from Step 3 by 420 (the Step 7: Multiply the amount in Step 6 by 75%. This
number of months in 35 years). Round down to the is your estimated monthly retirement benefit if you
next lowest dollar. This will give you your average retire at age 62. $_________
indexed monthly earnings. $_________
A. B. C. D.
A. B. C. D. Year Maximum Actual Index Indexed
Year Maximum Actual Index Indexed earnings earnings factor earnings
earnings earnings factor earnings 1979 22,900 3.11
1951 $3,600 12.74 1980 25,900 2.85
1952 3,600 11.99 1981 29,700 2.59
1953 3,600 11.36 1982 32,400 2.45
1954 3,600 11.30 1983 35,700 2.34
1955 4,200 10.80 1984 37,800 2.21
1956 4,200 10.09 1985 39,600 2.12
1957 4,200 9.79 1986 42,000 2.06
1958 4,200 9.70 1987 43,800 1.93
1959 4,800 9.25 1988 45,000 1.84
1960 4,800 8.90 1989 48,000 1.77
1961 4,800 8.72
1990 51,300 1.70
1962 4,800 8.31
1991 53,400 1.63
1963 4,800 8.11
1992 55,500 1.55
1964 4,800 7.79
1993 57,600 1.54
1965 4,800 7.65
1994 60,600 1.50
1966 6,600 7.22
1995 61,200 1.44
1967 6,600 6.84
1996 62,700 1.38
1968 7,800 6.40
1997 65,400 1.30
1969 7,800 6.05
1998 68,400 1.24
1970 7,800 5.76
1999 72,600 1.17
1971 7,800 5.49
2000 76,200 1.11
1972 9,000 5.00
2001 80,400 1.08
1973 10,800 4.70
2002 84,900 1.07
1974 13,200 4.44
2003 87,000 1.05
1975 14,100 4.13
2004 87,900 1.00
1976 15,300 3.86
2005 90,000 1.00
1977 16,500 3.65
1978 17,700 3.38
Social Security Administration
SSA Publication No. 05-10070
w w w. s o c i a l s e c u r i t y. g o v ICN 467100
Unit of Issue - HD (one hundred)
January 2006 (Recycle prior editions)