What does the Social Security Administration use to calculate future benefit amounts?

The Social Security Administration calculates future benefit amounts based on the individual's lifetime earnings history, which is compiled and included in the annual Social Security statement. This lifetime earnings history reflects an individual’s total earnings over their working life, adjusted for inflation. The administration uses a formula that takes into account the earnings over the person’s working years, particularly focusing on the highest 35 years of indexed earnings, to determine the primary insurance amount (PIA). This approach ensures that benefit calculations are comprehensive and reflect the true earning potential of the individual throughout their employment, rather than relying on a limited timeframe or simply a single year of earnings.