Automatic Determinations

Average wage index

Examples of indexed earnings

Indexing earnings
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 2018, then 2018 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 2018, the person's earnings would be indexed to the average wage index for 2016 (48,664.73). Earnings in a year before 2016 would be multiplied by the ratio of 48,664.73 to the average wage index for that year; earnings in 2016 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
Note: If you select a year after 2018, we will use average wage changes that were estimated under the intermediate assumptions in the latest Trustees Report.

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