Social Security Benefit Formula
PIA formula bend points, replacement rates, and how your Social Security benefit is calculated from your earnings history.
Key Numbers
1st Bend Point
90% of $1,286
2nd Bend Point
32% of $1,286–$7,749
Above 2nd
15%
Earnings Base
35 Highest Years
Social Security bend points are dollar thresholds in the Primary Insurance Amount (PIA) formula that determine how much of your average earnings are replaced by your monthly benefit. The formula is progressive — lower earners receive a higher percentage replacement. The bend points used in your calculation are locked the year you turn 62, even if you claim later.
2026 PIA Formula Brackets
| AIME Range | Replacement Rate | Max Contribution to PIA |
|---|---|---|
| First $1,286 | 90% | $1,157.40 |
| $1,286 – $7,749 | 32% | $2,068.16 |
| Above $7,749 | 15% | Varies by AIME |
For workers turning 62 in 2026. PIA = (90% × first $1,286) + (32% × AIME from $1,286 to $7,749) + (15% × AIME above $7,749).
How the Formula Works
1. Calculate AIME: Your Average Indexed Monthly Earnings are calculated from your 35 highest-earning years, adjusted for national wage growth (indexed to age 60). Years with $0 are included if you have fewer than 35 years of work.
2. Apply Bend Points: Your AIME is split into three brackets at the bend points. Each bracket is multiplied by its replacement rate (90%, 32%, 15%).
3. Sum = PIA: The total is your Primary Insurance Amount — the monthly benefit at Full Retirement Age. The PIA is truncated (rounded down) to the nearest $0.10.
Bend points lock at 62: The bend points from the year you turn 62 are used in your benefit calculation, regardless of when you actually claim. This is why bend point tables reference "year of eligibility."
PIA Formula & Replacement Rates
While the marginal rates are fixed at 90%/32%/15%, the effective replacement rate decreases as earnings rise. Only earnings up to the taxable maximum ($184,500 in 2026) count toward benefits, capping the maximum possible AIME at roughly $14,358/month.
Effective Replacement Rates by Earnings Level
| Earner Level | AIME | Annual Earnings | Est. PIA | Replacement Rate |
|---|---|---|---|---|
| Very Low | $1,286 | ~$15,400 | $1,157 | ~90% |
| Low | $2,500 | ~$30,000 | $1,546 | ~62% |
| Medium | $6,000 | ~$72,000 | $2,665 | ~44% |
| High | $10,000 | ~$120,000 | $3,305 | ~33% |
| Maximum | ~$14,358 | $184,500+ | ~$4,217 | ~29% |
Estimates assume 2026 bend points ($1,286 / $7,749). Actual PIA depends on exact earnings history and indexing. Maximum AIME assumes earning at or above the taxable maximum for all 35 computation years.
Maximum Benefits (2026)
| Claiming Age | Max Monthly Benefit | Notes |
|---|---|---|
| 62 (earliest) | ~$2,710 | Reduced 30% for 60 months early |
| 67 (FRA) | ~$4,152 | Full PIA, no reduction or credits |
| 70 (max DRCs) | ~$5,150 | +24% delayed retirement credits |
Taxable maximum caps your AIME: In 2026, only earnings up to $184,500 are subject to Social Security tax and counted toward benefits. Earnings above this threshold do not increase your future benefit.
Bend Point History
Bend points are indexed annually to the National Average Wage Index (AWI). Since 1979, both bend points have increased roughly 614%, tracking national wage growth. In rare cases (such as 2011, following the 2008 recession), bend points can decrease if wages decline.
Recent Bend Points (2015–2026)
| Year | First Bend Point | Second Bend Point | YoY Change |
|---|---|---|---|
| 2026 | $1,286 | $7,749 | +4.9% |
| 2025 | $1,226 | $7,391 | +4.4% |
| 2024 | $1,174 | $7,078 | +5.3% |
| 2023 | $1,115 | $6,721 | +8.9% |
| 2022 | $1,024 | $6,172 | +2.8% |
| 2021 | $996 | $6,002 | +3.7% |
| 2020 | $960 | $5,785 | +3.7% |
| 2019 | $926 | $5,583 | +3.5% |
| 2018 | $895 | $5,397 | +1.1% |
| 2017 | $885 | $5,336 | +3.4% |
| 2016 | $856 | $5,157 | +3.6% |
| 2015 | $826 | $4,980 | +1.2% |
Long-Term Growth (Selected Years)
| Year | First Bend Point | Second Bend Point |
|---|---|---|
| 1979 (formula began) | $180 | $1,085 |
| 1990 | $356 | $2,145 |
| 2000 | $531 | $3,202 |
| 2010 | $761 | $4,586 |
| 2011 (recession dip) | $749 | $4,517 |
| 2020 | $960 | $5,785 |
| 2026 | $1,286 | $7,749 |
Bend points can decrease: In 2011, bend points fell from their 2010 levels due to the 2008 recession's impact on average wages. A decrease does not reduce benefits for those already receiving them — it only affects newly eligible workers.
Calculation Examples
These examples use the 2026 bend points ($1,286 / $7,749) for workers turning 62 in 2026. The progressive formula means high earners replace a much smaller share of pre-retirement income.
| Earner Type | AIME | 90% Bracket | 32% Bracket | 15% Bracket | PIA | Repl. Rate |
|---|---|---|---|---|---|---|
| Low ($24K/yr) | $2,000 | $1,157.40 | $228.48 | $0.00 | $1,385.88 | 69.3% |
| Medium ($72K/yr) | $6,000 | $1,157.40 | $1,508.48 | $0.00 | $2,665.88 | 44.4% |
| High ($144K/yr) | $12,000 | $1,157.40 | $2,068.16 | $637.65 | $3,863.21 | 32.2% |
| Maximum | $14,358 | $1,157.40 | $2,068.16 | $991.35 | $4,216.91 | 29.4% |
Worked Example: Medium Earner
AIME: $6,000/month (~$72,000 average annual earnings)
90% × $1,286 = $1,157.40
32% × ($6,000 − $1,286) = 32% × $4,714 = $1,508.48
15% × $0 (AIME below second bend point) = $0.00
PIA = $1,157.40 + $1,508.48 + $0.00 = $2,665.80
Truncated to nearest $0.10. Replacement rate: $2,665.80 ÷ $6,000 = 44.4%
Planning note: The progressive formula means high earners need more personal savings to maintain their pre-retirement lifestyle. A low earner may replace ~70% of income through Social Security alone, while a maximum earner replaces only ~29%.
Sources
- 1.Social Security Administration — Benefit Formula Bend Points
- 2.Social Security Administration — PIA Benefit Formula
- 3.Social Security Administration — Benefit Calculation Examples for Workers Retiring in 2026
- 4.Social Security Administration — Contribution and Benefit Base (Taxable Maximum)
- 5.Social Security Administration — 2026 COLA Fact Sheet
- 6.Society of Actuaries — Social Security Changes for 2026
This content is for educational and informational purposes only and does not constitute financial, tax, or legal advice. Consult a qualified professional for guidance tailored to your situation.