Ever wonder how your Social Security benefits are calculated? It all comes down to your top 35 years of earnings and a formula that most people don’t fully understand. Join Deanne Rosso and Brian Rosso on Elevate Wealth as they explain how your work history, inflation adjustments, and earning credits impact your benefit—and how to make informed decisions.

How are Social Security benefits calculated? If you're nearing retirement, understanding this calculation can make a big difference in your financial future. Let's talk about it today on Elevate Wealth. Hello again. I'm Deanne Rosso, president and CEO of Elevate Wealth Advisory. And today we're breaking down the details of how Social Security benefits are determined. I'm joined today by our Director of Operations and wealth adviser, Brian Rosso. Hi, Brian. Hey, Deanne. So, Brian is going to help today by explaining how this complex process works. So, thank you for being here, Brian. And how exactly are Social Security benefits calculated, and what should people know about the factors that influence this calculation? That's a good question. And there's a lot of calculations involved in determining what your Social Security benefit is. And a lot of those are often misunderstood. But in short, your Social Security benefit is going to be based on your 35 highest earning years. Okay. And the Social Security Administration takes those years, indexes them for inflation, and then they average them together to create what's called your AIM, your Average Index Monthly Earnings. They take that number, then apply it to another set of formulas with three different percentage calculations to determine what your PIA is or your Primary Insurance Amount. Okay. So 35 years highest earnings. That's right. Every year is index for inflation. And then after that, they're going to get your AIME, average index monthly earnings. And they're going to apply that to the three bin calculation to get your PIA, primary insurance amount. Right. Oh, that's so easy. Oh yeah, right. Everybody can do it. And your PIA is essentially what your benefit would be at your full retirement age. Right. Okay. So, what about zeros? If you have zeros in your work history, how does that impact your... Yeah, there's a couple things to keep in mind, and you mentioned one. If you don't have a full 35 years of of working record, zeros are also included in that average, and that's going to reduce your benefit. The other thing I think people should look out for that isn't often aware for a lot of workers is some systems still don't contribute or you can opt out of Social Security. And so if that's the case, sometimes these individuals may not know until retirement. So they may not fully qualify. There's a minimum of 10 years or 40 credits. You can earn four credits per year. So most individuals have to work a record of 10 years to qualify for benefits. So, it's really important to kind of do the research to make sure that you qualify for Social Security, right? So, I think it's important to get your statement, your Social Security statement, look at your earnings years. Make sure that if there are zeros in the earnings history that you know why there's a zero there and if it's not supposed to be there, that you worked on getting that fixed. But, you know, those numbers are crucial to your Social Security benefit and your calculation in the end. And that can impact many decisions about your retirement. When to take the Social Security, how much it's going to be, how much that's going to impact you know your retirement income and so on and so forth. So. That's right. So thank you, Brian, for explaining that to us today, that very simple formula to us today. And it's not simple, it's complicated. And so if you have questions, we get a lot of questions about Social Security. So, if Social Security is of interest to you and you want to learn more about it, visit us at elevate-wealth.com and click "Let's talk."