Table of Contents
Table of Contents

# Average Indexed Monthly Earnings (AIME): Meaning, Overview, FAQ

## What Are Average Indexed Monthly Earnings (AIME)?

Average indexed monthly earnings (AIME) are used to calculate the primary insurance amount (PIA), which is used to determine an individual's Social Security benefits. AIME works by taking into consideration the 35 years that represent an individual's top earnings. Those top-earning years are then indexed to factor in wage growth and averaged to produce a monthly figure.

More simply stated, AIME attempts to approximate a lifetime of earnings using today's wage levels as a benchmark.

### Key Takeaways

• Average indexed monthly earnings (AIME) are used to calculate a person's Social Security benefits.
• Up to 35 years of earnings are used to compute average indexed monthly earnings (AIME).
• The first year a person is eligible for benefits, which is 62 for retirees, is the starting point for determining indexed earnings.
• In calculating primary insurance amounts, AIME is split into three parts, which are then computed into a total monthly benefit.

## Understanding Average Indexed Monthly Earnings (AIME)

In order to calculate the PIA, the average indexed monthly earnings (AIME) is split into three parts. Predetermined percentages are applied to each part, and they are all summed together to get the PIA. If someone receives Social Security benefits, the number they use to calculate that benefit is from the primary insurance amount (PIA).

## What Are Indexed Earnings for Social Security Purposes?

Indexed earnings for Social Security is how the Social Security Administration determines a person's Social Security benefits. Up to 35 years of earnings are indexed, with the highest years being chosen. The earnings are divided by the total months in those years to arrive at one's average indexed monthly earnings (AIME).

Correction—Jan. 30, 2022: A previous version misstated how wages are indexed in AIME calculations.

Correction—Feb. 16, 2022: A previous version of this article misstated the process in which wages are indexed in calculating AIME.

Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
1. Social Security Administration. "Social Security Benefit Amounts."

2. Social Security Administration. "Primary Insurance Amount."

3. Social Security Administration. "Social Security Act: Computation of Primary Insurance Amount."

4. Social Security Administration. "Program Operations Manual System (POMS)."

5. Social Security Administration. "Indexing Factors for Earnings."

6. Social Security Administration. "Monthly Statistical Snapshot, September 2022."

Open a New Bank Account
×
The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.
Sponsor
Name
Description