Social Security benefit calculation - highest 35 years or last 5 years of income?

It's actually your highest 35 years of earnings, not 5 years. Social Security calculates your benefit using your highest 35 years of earnings (adjusted for inflation). If you don't have 35 years of earnings, they'll use zeros for the missing years, which brings down your average. Your most recent years only matter if they're among your highest 35. This calculation gives you your Average Indexed Monthly Earnings (AIME), which is then used to determine your Primary Insurance Amount (PIA) - your basic benefit amount at full retirement age.

My uncle told me it was based on the last 3 years! I've been working extra shifts trying to boost my income before retiring next year. Are you saying that was all for nothing??

This is one of the most common misconceptions about Social Security! It's definitely your highest 35 years, but with an important caveat - those earnings are indexed for inflation. So your earnings from 1990 aren't compared to your 2023 earnings at face value. The older earnings are adjusted upward to account for wage growth over time. What many people don't realize is that those early career years, even with lower salaries, can sometimes count more than you'd expect after indexing. You can create a my Social Security account at ssa.gov to see your actual earnings history and get a personalized estimate.

They absolutely use zeros for any missing years if you don't have 35 years of work. That's why it's sometimes beneficial to work a few extra years if you have fewer than 35 years of earnings - even a small income is better than a zero in the calculation. And just to add another important detail: they specifically use the highest 35 years where you paid Social Security taxes. If you worked for a state government with a pension system instead of Social Security for some years, those years wouldn't count in the calculation.

Yes, exactly! Even part-time work after your main career can increase your benefit if you have fewer than 35 years of earnings. Those part-time earnings would replace zeros in your calculation, which can definitely boost your benefit. One more thing - you can actually check your earnings history and get a personalized estimate by creating a my Social Security account on ssa.gov. This shows you exactly what earnings they have on record for you and gives you a benefit estimate based on your actual work history.

I had the same problem with the SSA website last month! I finally got through to a real person using Claimyr (claimyr.com). They connect you directly to a Social Security agent without the endless hold times. I was skeptical at first but they have a video showing how it works: https://youtu.be/Z-BRbJw3puU The agent I spoke with was able to help me access my earnings history and explained how my benefit would be calculated. She even pointed out years where my employers hadn't properly reported my earnings, which I would have never known about otherwise.

just to clarify something - 35 yrs is the max they count right? i have worked 42 yrs nonstop and wondering if all those early years even count for anything?

Thanks everyone for clearing this up! So if I understand correctly: 1. SSA uses my highest 35 years of earnings (not 5) 2. They adjust the older earnings for inflation 3. If I don't have 35 years, they use zeros for missing years 4. Working longer could help if I replace lower earning years This changes my retirement planning quite a bit - in a good way! Actually makes me feel better about my situation since my income went down in recent years but I had some good income years in the past.