The same methodology is that used to determine your benefit amount. It is "redone" each year that you work and have reported income. It uses your top 35 years, indexed though to account for inflation, then determines you average monthly income for those years. (i.e. your total divided by 35 years, divided by 12 months). To that amount, the applies the formula - which includes "bend" points (3) and percentages for each bend point (3 also).
"The PIA is the sum of three separate percentages of portions of average indexed monthly earnings. The portions depend on the year in which a worker attains age 62, becomes disabled before age 62, or dies before attaining age 62.
For 2017 these portions are the first $885, the amount between $885 and $5,336, and the amount over $5,336. These dollar amounts are the "bend points" of the 2017 PIA formula. A table shows bend points, for years beginning with 1979, for both the PIA and maximum family benefit formulas.
For an individual who first becomes eligible for old-age insurance benefits or disability insurance benefits in 2017, or who dies in 2017 before becoming eligible for benefits, his/her PIA will be the sum of:
(a) 90 percent of the first $885 of his/her average indexed monthly earnings, plus
(b) 32 percent of his/her average indexed monthly earnings over $885 and through $5,336, plus
(c) 15 percent of his/her average indexed monthly earnings over $5,336.
We round this amount to the next lower multiple of $.10 if it is not already a multiple of $.10."
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