When we compute a person's benefit, we use the
national average wage indexing series to index
that person's earnings. Such indexation ensures that a worker's future
benefits reflect the general rise in the standard of living that occurred
during his or her working lifetime.
Eligibility and indexing
Wage indexing depends on the year in which a person is first eligible
to receive benefits. For retirement, eligibility is at age 62.
So if a person reaches age 62 in 2016, then 2016 is the
person's year of eligibility.
An individual's earnings are always indexed to the average wage level two
years prior to the year of first eligibility. Thus, for a person
retiring at age 62 in 2016, the person's earnings would be indexed to
the average wage index for 2014 (46,481.52). Earnings in a year
before 2014 would be multiplied by the ratio of 46,481.52 to the
average wage index for that year; earnings in 2014 or later would be
taken at face value.
A person's indexed earnings are used to calculate an
average indexed monthly earnings (AIME)
amount. We use this AIME amount to compute the person's
primary insurance amount.
Year of eligibility
If you select a year after 2016, we will use
average wage changes that were estimated under the intermediate assumptions
in the latest Trustees Report.