Average Indexed Monthly Earnings - AIME

DEFINITION of 'Average Indexed Monthly Earnings - AIME'

A calculation used to determine the Primary Insurance Amount (PIA) amount used to value an individuals social security benefits. The Average Indexed Monthly Earnings (AIME) takes your top 35 highest earning years up to age 60 and indexes it for wage growth, and then averages it to get a monthly amount. The AIME tries to approximate your earnings over your lifetime at today's wage levels.

BREAKING DOWN 'Average Indexed Monthly Earnings - AIME'

If you recieve Social Security benefits, the number they used to calculate that benefit is from the Primary Insurance Amount (PIA). In order to calculate the PIA, the AIME is split into three parts. Predetermined percentages are applied to each part and they are all summed together to get the PIA.

For example, suppose your AIME is $5,000. The PIA calculation would take 90% from the first $744, then 32% from earnings over $744 but under $4483, and lastly 15% of monthly earnings over $4483. In this example your PIA would be $1943.63.

RELATED TERMS
  1. Primary Insurance Amount - PIA

    A calculation, used in conjunction with the Average Indexed Monthly ...
  2. Indexed Earnings

    A worker's past wages that have been adjusted for changes in ...
  3. Covered Earnings

    The total amount of an employee's pay that is eligible for use ...
  4. Outside Earnings

    Income that temporarily reduces a retired individual's Social ...
  5. Social Security

    A United States federal program of social insurance and benefits ...
  6. National Average Wage Index - NAWI

    An index calculated annually by the Social Security Administration ...
Related Articles
  1. Budgeting

    You Won't Earn More Benefit Credits After A Certain Age

    Here we'll debunk seven of the most common social security benefit myths.
  2. Retirement

    iMaximize Social Security

    Platform: Online, iOS, Android Cost: Free for basic version; $9.99 for additional features. The iMaximize Social Security calculator was developed to help anyone at or nearing retirement age ...
  3. Professionals

    III. How Benefits Are Calculated

    III. How Benefits Are Calculated
  4. Saving and Spending

    How Working Longer Impacts Social Security

    A look at the impact of working longer on Social Security retirement benefits.
  5. Retirement

    11 Social Security Calculators Worth Your Time

    The safest Social Security calculators to use when figuring benefits are on the official website. The best are the ones that access your actual record.
  6. Retirement

    The 3 Best Social Security Calculators For 2016

    Find out how to analyze your Social Security benefits under different retirement scenarios using multifunctional online Social Security calculators.
  7. Retirement

    Can Your 401(k) Impact Your Social Security Benefits?

    Find out why income from a 401(k) does not affect the amount of your Social Security benefits, but how it can impact your annual tax bill if you earn too much.
  8. Financial Advisors

    What Will My Social Security Check Look Like?

    It's important to know what your Social Security check will look like in retirement. Here's how you can figure it out.
  9. Retirement

    How Having a Job Affects Social Security Benefits

    Social Security benefits mean a lot to retirees' finances. Having a job, even part-time, can complicate matters if certain benchmarks aren't reached.
  10. Retirement

    How Social Security Benefits Are Estimated & Taxed

    The Social Security check you'll get depends on your work history, when you start claiming a benefit and these other factors.
RELATED FAQS
  1. What is the difference between early retirement and full retirement as it applies ...

    If you were born in 1929 or later, you'll need forty Social Security credits to be eligible for Social Security retirement ... Read Answer >>
  2. How are Social Security benefits affected by your income?

    Understand the relationship between a worker's earned income and benefits he or she receives from Social Security in retirement, ... Read Answer >>
  3. What is the maximum I can receive from my Social Security retirement benefit?

  4. Can I collect Social Security if I still have a job?

    Find out about some circumstances that would allow you to collect Social Security while you're working and how your benefits ... Read Answer >>
  5. At what age will I be eligible for the maximum Social Security payout?

    The year you choose for collecting your social security will play a large part in determining how much money you'll receive ... Read Answer >>
  6. Are Social Security benefits affected by marriage?

    Find out why marriage does not affect your Social Security retirement benefits and what factors influence your maximum benefit ... Read Answer >>
Hot Definitions
  1. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  2. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  3. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  4. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  5. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
  6. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
Trading Center