1. What Are Indexed Earnings?

Indexed earnings are your historical earnings adjusted for wage inflation. The Social Security Administration indexes your past earnings to reflect current wage levels, making historical earnings comparable to today's dollars.

2. How SSA Calculates Average Monthly Income

The SSA uses this formula to calculate your average indexed monthly earnings (AIME):

Where:

• 420 represents 35 years × 12 months
• Only your highest 35 years of earnings are counted
• Years with no earnings count as zeros in the calculation

3. Importance of the 35-Year Calculation

Details: Using 35 years of earnings data provides a comprehensive picture of your lifetime earnings. Fewer than 35 years of work will lower your average, while more than 35 years allows the SSA to drop your lowest-earning years.

4. Using This Calculator

Tips: Enter your total indexed earnings (sum of your highest 35 years of earnings after wage indexing). The calculator will divide by 420 to determine your average monthly income.

5. Frequently Asked Questions (FAQ)

Q1: What if I worked fewer than 35 years?
A: The SSA still divides by 420, but includes zero-earning years in your calculation, which lowers your average.

Q2: How does this affect my Social Security benefits?
A: Your AIME is the basis for calculating your primary insurance amount (PIA), which determines your retirement benefit.

Q3: Where can I find my indexed earnings?
A: Create a mySocialSecurity account at ssa.gov to view your official earnings record.

Q4: Does this include all my earnings?
A: Only earnings up to the taxable maximum each year are counted (indexed).

Q5: Why 35 years specifically?
A: 35 years was chosen as a reasonable approximation of a full career for benefit calculation purposes.