Understanding Your Social Security Benefits

Skip West
3 min readFeb 27, 2023

When you claim your Social Security benefits, it’s important to understand all the factors that affect them. This includes your age, marital status, and financial situation. A key benefit of Social Security is that it keeps up with inflation and is guaranteed for the lifetimes of all beneficiaries. However, it is subject to a few complicated provisions.

Your primary insurance amount (PIA) is the base amount of Social Security benefits you receive if you file for them at your full retirement age. Your PIA is based on two important numbers: average indexed monthly earnings and your full retirement age.

To determine your PIA, SSA takes up to 35 years of your highest earnings and adjusts them for inflation. Then, SSA calculates your average indexed monthly earnings (AIME). AIME is the basis for determining how much you can expect to receive in Social Security benefits. A strong earnings history, including a long time of employment and higher earnings, will contribute to a stronger PIA.

The PIA formula then converts AIME to a primary insurance amount by applying “bend points” at specific income levels, reducing the actual PIA. The bend points are adjusted each year to reflect changes in the average wage index, but the percentage reductions at each bend point are fixed.

You’re entitled to a basic benefit amount — called your primary insurance amount (PIA) by Social Security — based on your income. This is a combination of your highest 35 years’ earnings and an inflation-adjusted average of those earnings. This amount is indexed to inflation each year so your benefits keep up with increasing living costs. The SSA also adjusts your payment amounts each year with cost-of-living adjustments, or COLAs.

The amount you get each month depends on a few things, including the year you claim your benefits and how many months you have until your full retirement age. Early claimers typically see a reduction in their PIA, and delayed claimers receive a boost as the months pass until they reach their full retirement age.

If you are receiving Social Security Disability Insurance (SSDI), your payment date will depend on the day of your birth. If you were born on the 1st through 10th days of the month, you’ll receive your SSDI checks or direct deposit on the second Wednesday of each month.

If you were born on the 11th through 20th of the month, your benefits will be paid on the third Wednesday. Finally, if you were born on the 21st through 31st of the month, your payments will be made on the fourth Wednesday. If your payment date falls on a weekend or holiday, it will go out the following day. You can find your exact payment date on the SSA’s website. It’s a good idea to check your calendar frequently to keep track of your monthly payments.

A spousal benefit is a way for married couples to get more retirement income than they might expect. It’s based on the higher-earning spouse’s Social Security benefits. In a standard spousal benefit, the lower-earning spouse is entitled to a monthly check that’s up to 50% of the other spouse’s Social Security benefit — less if he or she claims before full retirement age (FRA). This can give you a boost when it comes to your own income if you work until you’re older.

But there’s a trick to making the most of this benefit. It’s to delay filing for your own benefits as long as you can — until past your full retirement age, says Claire Toth, managing principal and senior wealth strategist at New Jersey-based Peapack-Gladstone Bank.

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Skip West

Skip West was birthed in Greenville, South Carolina, but he relocated to Arkansas as an adult.