Redessociales

One of the great mysteries of personal finance is:  How are social security retirement benefits calculated?  The computation itself is something of a mystery.  It’s so complex that I’m not sure who could have dreamed it up.  I am sure that most in Congress don’t understand it.  In this article we’ll take an abbreviated look at what goes into the computation.

We will be concentrating on the method of computing retirement benefits in place since 1979.  Before then a different, but equally bizarre, method was used.  The changes were instituted in 1979 to help keep benefits more or less inflation-proof.  The computation begins by determining a worker’s Average Indexed Monthly Earnings (AIME).  The AIME is based on the worker’s social security wages or earnings from self-employment after 1950, but only up to the social security maximum for each year.

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