Averaged Indexed Monthly Earnings (AIME)
Published: 9/19/2025
Your Social Security benefits are fundamentally based on a single key calculation: your Averaged Indexed Monthly Earnings (AIME). Understanding how this number is calculated is crucial to understanding your Social Security benefits and how different earning patterns throughout your career affect your retirement income.
What is AIME?
The Averaged Indexed Monthly Earnings (AIME) is the monthly average of your highest 35 years of earnings, adjusted over time by wage growth. This single number forms the foundation for calculating your Primary Insurance Amount (PIA), which determines your actual Social Security benefit amount.
The Three-Step AIME Calculation Process
Step 1: Index Your Earnings
Social Security doesn't use your raw earnings from each year. Instead, it applies wage indexing multipliers to adjust your historical earnings to reflect wage growth. These multipliers scale your earnings from each year to be equivalent to wages in the year you turn 60.
For example, if you earned $30,000 in 1995 and the indexing factor for 1995 is 2.1, your indexed earnings for that year would be $63,000 ($30,000 x 2.1 = $63,000). This adjustment ensures that your earlier career earnings aren't diminished by years of wage inflation.
The indexing multipliers increase every year until you reach age 60, after which point they are fixed. Years after age 60 use a 1.0 multiplier (no indexing). For more detailed information about how these indexing factors work and why SSA.tools uses current year factors for younger recipients, see our Indexing Factors guide.
It's important to note that your earnings in any given year are also subject to the annual earnings cap. Only earnings up to this cap count toward your Social Security benefits. For detailed information about how these caps work and their historical values, see our Earnings Cap guide.
Step 2: Select Your Top 35 Years
Once all your earnings are indexed, Social Security takes your highest 35 years of indexed earnings. If you have fewer than 35 years of earnings, zeros are used for the missing years.
This means that if you have more than 35 years of earnings, only your highest 35 count toward your benefit calculation. Lower earning years are effectively ignored. Conversely, if you have fewer than 35 years, every additional year you work will likely increase your AIME.
Example: Impact of the 35-Year Rule
Consider someone with 40 years of earnings. Their top 35 years have indexed earnings ranging from $45,000 to $75,000, while their bottom 5 years have indexed earnings of $20,000 to $35,000. Only the top 35 years count toward their AIME calculation—the lower 5 years are completely ignored.
Step 3: Calculate the Monthly Average
Your AIME is calculated by summing your top 35 years of indexed earnings and dividing by 420 months (35 years × 12 months). The formula is straightforward:
The result is always rounded down to the nearest dollar. For example, if your calculation yields $3,847.83, your AIME would be $3,847.
Why AIME Matters
Your AIME directly determines your Primary Insurance Amount (PIA) through a progressive benefit formula. The Social Security Administration applies different percentage rates to different portions of your AIME:
- 90% of the first portion of your AIME (up to the first "bend point")
- 32% of the middle portion (between the first and second bend points)
- 15% of any remaining amount above the second bend point
For a detailed explanation of how these bend points work and their implications for your benefits, see our comprehensive Primary Insurance Amount (PIA) guide.
This progressive structure means that Social Security provides higher replacement rates for lower earners while still providing meaningful benefits for higher earners.
Strategies to Maximize Your AIME
Work at Least 35 Years
Since AIME is based on 35 years of earnings, working fewer than 35 years means zeros are averaged into your calculation. Each additional year of work (up to 35) will replace a zero and increase your AIME.
Continue Working After 35 Years
If you already have 35 years of earnings, additional years can still help if your current earnings exceed your lowest indexed earning years. Each high-earning year can replace a lower earning year in your top 35.
Maximize Earnings Within the Cap
Since only earnings up to the annual cap count toward Social Security, there's no benefit calculation advantage to earning above the cap in any given year. However, consistently earning at or near the cap will maximize your AIME.
Common AIME Misconceptions
"My Recent High Earnings Will Dramatically Boost My Benefits"
While recent high earnings can help, remember that AIME is an average over 35 years. A few high-earning years late in your career may improve your AIME, but the impact is diluted across the entire 35-year period.
"Working Past Age 60 Doesn't Affect Indexing"
While it's true that earnings after age 60 aren't indexed (they use a 1.0 multiplier), they can still improve your AIME if they're higher than your lowest earning years in your top 35.
"I Need to Work Until 65 to Maximize My Benefits"
Your AIME calculation is independent of when you choose to claim benefits. You could stop working at 55 and your AIME would be fixed based on your earnings history through that point. However, continuing to work and earn can improve your AIME by replacing lower earning years.
Using SSA.tools to Understand Your AIME
The SSA.tools calculator provides detailed information about your AIME calculation. When you input your earnings record, you can see:
- Your indexed earnings for each year
- Which years are included in your top 35
- Your total indexed earnings and resulting AIME
- How future earnings scenarios might affect your AIME
The calculator also shows you the "cutoff" indexed earnings amount—the lowest indexed earning year in your top 35. Any future year where your indexed earnings exceed this amount will improve your AIME.
Conclusion
Understanding your AIME is fundamental to understanding your Social Security benefits. This single number, representing your average monthly earnings over your highest 35 years (adjusted for wage growth), determines your Primary Insurance Amount and ultimately your benefit payments.
By understanding how AIME is calculated, you can make more informed decisions about your career, retirement timing, and overall financial planning. Whether you're early in your career or approaching retirement, knowing how your earning patterns affect this crucial calculation can help you optimize your Social Security benefits.