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How to Estimate What Your Social Security Payments Will Be

In 2019, the average monthly social security benefit for retired workers was $1,471.1 Whether this amount seems like a lot or a little will depend on your current income. Most financial advisors agree that you'll need approximately 70 percent of your pre-retirement earnings to comfortably maintain your pre-retirement standard of living; however, if you have average earnings, Social Security payments will only replace approximately 40 percent of that income.2  If you have a higher income, this percentage will be lower, as the payments are replacing less of your previous earnings. If you have a lower income, the percentage is higher.2

Regardless of your pre-retirement income, most individuals will need to supplement their social security benefits through other means, such as savings, investments, or a pension. But how can you know how much more you’ll need if you want to live well during retirement? To understand how to best prepare, you can start by estimating what your Social Security payments may be. 

What is the PIA Formula?

If deciding to receive benefits at the normal retirement age, the “primary insurance amount” (PIA) is  the monthly benefit you would receive.3 For those eligible in 2020, your PIA is the sum of three different portions of your average indexed monthly earnings (AIME):4

  • 90 percent of your first $960 average indexed monthly earnings 
  • 32 percent of your average indexed monthly earnings between $960 and up to $5,785
  • 15 percent of your average indexed monthly earnings over $5,7853

To find your average indexed monthly earnings, you’ll need the years with the highest indexed earnings from 35 years of earnings, which you can find on your Social Security statement. Once you have those high-earning years, you can find the average, which is your AIME.4 

How Can I Estimate My Retirement Benefits? 

Once you have your AIME, you can calculate the percentages of the three different sections of your AIME and add them up, based on the PIA formula. You can also receive an estimate by creating a personal Social Security account with the Social Security Administration. 

However, bear in mind that your actual benefits may look different from your estimate. This is because laws regarding benefit amounts may change and your earnings may continue to alter over time. In addition, your benefits will be adjusted for living costs at the time you start receiving benefits.5

3 Factors That Impact Your Retirement Benefits

1. Lifetime Earnings

Since your benefits are a sum of percentages based on your earnings, higher lifetime earnings mean higher benefits, whereas lower earnings, or gaps in earnings, results in lower benefits.2

2. Age

If you opt to receive benefits before your full retirement age, your benefits will be lower. On the other hand, if you wait to receive retirement benefits until after your full retirement age, your benefits might be higher.2

3. Employment

Paying for social security looks different for those who are self-employed, work for a federal, state, or local government, or work outside of the United States.2 If you are in one of those categories, it’s important to understand how this may affect your benefits during retirement.

Preparing for your post-work days may also look like reflecting on what you want your lifestyle to be during that time. By estimating your Social Security payments, you have a better idea of the other steps you might need to take, such as opening a retirement savings account, so you can experience your envisioned retirement.

As always, we welcome any questions you may have about your finances. Reach out to Deb to review your situation and gain some perspective on what your options are.


  1. https://www.ssa.gov/news/press/factsheets/basicfact-alt.pdf
  2. https://www.ssa.gov/planners/retire/r&m6.html
  3. https://www.ssa.gov/oact/COLA/piaformula.html
  4. https://www.ssa.gov/oact/progdata/retirebenefit2.html
  5. https://www.ssa.gov/benefits/retirement/estimator.html

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.