Primary Insurance Amount - PIA

DEFINITION of 'Primary Insurance Amount - PIA'

A calculation, used in conjunction with the Average Indexed Monthly Earnings (AIME), to determine a person's social security benefits. The Primary Insurance Amount (PIA) is the second step in determining the monthly retirement benefits and is calculated simply by making adjustments to the AIME.

BREAKING DOWN 'Primary Insurance Amount - PIA'

The AIME is is an average of the workers average lifetime earnings indexed for wage growth. The Primary Insurance Amount is found by splitting the AIME into three segments and multiplying specific percentages to each segment and summing up all the parts.

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. Average Indexed Monthly Earnings ...

    A calculation used to determine the Primary Insurance Amount ...
  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. Alternative Investment Market - ...

    A sub-market of the London Stock Exchange that permits smaller ...
  5. Unit Benefit Plan

    An employer-sponsored pension plan that provides retirement benefits ...
  6. Adjusted Earnings

    The sum of earnings, increases in loss reserves, increases in ...
Related Articles
  1. Retirement

    How Much Social Security Will You Get?

    You've been paying in for years - now it's time to find out what the system owes you.
  2. Retirement

    Delaying Social Security Can Add Up

    The age you start collecting Social Security benefits significantly affects how much you will get each month. Do the math before deciding when to file.
  3. Retirement

    Create Your Own Social Security Fund

    The government's Social Security program may not last forever - be prepared by setting up your own.
  4. Retirement

    Top 6 Myths About Social Security Benefits

    Misinformation on retirement benefits is common. We'll set the record straight.
  5. Financial Advisor

    Top Social Security Tips for Government Employees

    Government employees have special issues to consider when it comes to computing Social Security payouts. Here's how to navigate them.
  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

    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.
  8. Financial Advisor

    How Working Longer Impacts Social Security

    A look at the impact of working longer on Social Security retirement benefits.
  9. 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.
  10. Financial Advisor

    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.
RELATED FAQS
  1. Is there something wrong with the calculation of my SS benefits and widow's pension?

    My spouse did not work some of the years during our marriage of 37 years. How is it possible th... Read Answer >>
  2. What is the maximum I can receive from my Social Security retirement benefit?

  3. 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 >>
  4. Can I retire with full benefits?

    If I partially retire at 62 years old and still work part time, can I fully retire at 66 with full benefits? ... Read Answer >>
  5. Do I qualify for social security benefits from my ex-husband who is now deceased?

    I will be 62 in April. My ex-husband passed away in 2013 when he was 60 years old. We were married for 25 years. Do I qualify ... Read Answer >>
  6. I am coming out of retirement and I'm already getting a Social Security benefit. ...

Trading Center