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<h2 class="fw4 ma0">Benefit Calculation Examples for Workers Retiring in 2025</h2>
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<p> We illustrate the calculation of retirement benefits using two examples, labeled
case A and case B. In each case, the worker retires in 2025.
Case A, born in 1963, retires at age 62. Case B, born in 1959, retires at his
<a href="nra.html">normal (or full) retirement age</a>.
In each case, we assume the worker has covered earnings from 1985 through
2024, as shown at right in columns labeled "nominal earnings."</p>
<p>
Indexing brings nominal earnings up to near-current wage levels. For each case,
the table shows columns of earnings before and after indexing. Between these
columns is a column showing the <a href="../COLA/awifactors.html">indexing
factors</a>. A factor will always equal one for the year in which the person
attains age 60 and all later years. The indexing factor for a prior year
<i>Y</i> is the result of dividing the <a href="../COLA/AWI.html">average wage
index</a> for the year in which the person attains age 60 by the average wage
index for year <i>Y</i>. For example, the case-A indexing factor for 1985
is the average wage for 2023 ($66,621.80) divided by the average wage for
1985 ($16,822.51).</p>
<p>
We use the highest 35 years of indexed earnings in a benefit computation.
The dropped indexed amounts are shown in red. Below the indexed
earnings are the sums for the highest 35 years of indexed earnings and
the corresponding average monthly amounts of such earnings.
(The average is the result of dividing the sum of the 35 highest
amounts by the number of months in 35 years.) Such an average
is called an "average indexed monthly earnings" (AIME).
The <a href="retirebenefit2.html"><b>next step</b></a> is to calculate
benefits based on AIME amounts.</p>
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<div class="column-12 ">
<div class="pad-top pad left pad-right large">
<table class="borderblue" style="width:98%">
<caption><b>Earnings before and after indexing</b></caption>
<tr>
<th style="width:8%;" rowspan="2" scope="col">Year</th>
<th style="width:46%;" colspan="3">Case A, born in 1963</th>
<th style="width:46%;" colspan="3">Case B, born in 1959</th>
</tr>
<tr>
<th style="width:15%" scope="col" abbr="case A nominal earnings">Nominal<br />earnings</th>
<th style="width:15%" scope="col">Indexing<br />factor</th>
<th style="width:16%" scope="col" abbr="case A indexed earnings">Indexed<br />earnings</th>
<th style="width:15%" scope="col" abbr="case B nominal earnings">Nominal<br />earnings</th>
<th style="width:15%" scope="col">Indexing<br />factor</th>
<th style="width:16%" scope="col" abbr="case B indexed earnings">Indexed<br />earnings</th>
</tr>
<tr>
<td>1985</td>
<td>$15,729</td><td>3.9603</td><td style="color:red" abbr="dropout">$62,291</td>
<td>$39,600</td><td>3.2159</td><td style="color:red" abbr="dropout">$127,351</td>
</tr>
<tr>
<td>1986</td>
<td>16,247</td><td>3.8461</td><td style="color:red" abbr="dropout">62,488</td>
<td>42,000</td><td>3.1232</td><td>131,176</td>
</tr>
<tr>
<td>1987</td>
<td>17,337</td><td>3.6155</td><td style="color:red" abbr="dropout">62,683</td>
<td>43,800</td><td>2.9360</td><td style="color:red" abbr="dropout">128,596</td>
</tr>
<tr>
<td>1988</td>
<td>18,248</td><td>3.4458</td><td style="color:red" abbr="dropout">62,879</td>
<td>45,000</td><td>2.7982</td><td style="color:red" abbr="dropout">125,918</td>
</tr>
<tr>
<td>1989</td>
<td>19,030</td><td>3.3146</td><td style="color:red" abbr="dropout">63,077</td>
<td>48,000</td><td>2.6916</td><td>129,197</td>
</tr>
<tr>
<td>1990</td>
<td>19,971</td><td>3.1682</td><td>63,273</td>
<td>51,300</td><td>2.5728</td><td>131,983</td>
</tr>
<tr>
<td>1991</td>
<td>20,780</td><td>3.0544</td><td>63,471</td>
<td>53,400</td><td>2.4803</td><td>132,450</td>
</tr>
<tr>
<td>1992</td>
<td>21,918</td><td>2.9048</td><td>63,666</td>
<td>55,500</td><td>2.3588</td><td>130,913</td>
</tr>
<tr>
<td>1993</td>
<td>22,175</td><td>2.8800</td><td>63,864</td>
<td>57,600</td><td>2.3387</td><td>134,708</td>
</tr>
<tr>
<td>1994</td>
<td>22,840</td><td>2.8047</td><td>64,060</td>
<td>60,600</td><td>2.2776</td><td>138,020</td>
</tr>
<tr>
<td>1995</td>
<td>23,828</td><td>2.6966</td><td>64,255</td>
<td>61,200</td><td>2.1898</td><td>134,015</td>
</tr>
<tr>
<td>1996</td>
<td>25,070</td><td>2.5709</td><td>64,452</td>
<td>62,700</td><td>2.0877</td><td>130,898</td>
</tr>
<tr>
<td>1997</td>
<td>26,614</td><td>2.4291</td><td>64,649</td>
<td>65,400</td><td>1.9726</td><td>129,007</td>
</tr>
<tr>
<td>1998</td>
<td>28,092</td><td>2.3083</td><td>64,846</td>
<td>68,400</td><td>1.8745</td><td style="color:red" abbr="dropout">128,214</td>
</tr>
<tr>
<td>1999</td>
<td>29,747</td><td>2.1865</td><td>65,041</td>
<td>72,600</td><td>1.7755</td><td>128,903</td>
</tr>
<tr>
<td>2000</td>
<td>31,487</td><td>2.0719</td><td>65,238</td>
<td>76,200</td><td>1.6825</td><td style="color:red" abbr="dropout">128,205</td>
</tr>
<tr>
<td>2001</td>
<td>32,335</td><td>2.0236</td><td>65,434</td>
<td>80,400</td><td>1.6433</td><td>132,120</td>
</tr>
<tr>
<td>2002</td>
<td>32,758</td><td>2.0035</td><td>65,632</td>
<td>84,900</td><td>1.6270</td><td>138,129</td>
</tr>
<tr>
<td>2003</td>
<td>33,659</td><td>1.9557</td><td>65,828</td>
<td>87,000</td><td>1.5881</td><td>138,168</td>
</tr>
<tr>
<td>2004</td>
<td>35,329</td><td>1.8689</td><td>66,025</td>
<td>87,900</td><td>1.5176</td><td>133,396</td>
</tr>
<tr>
<td>2005</td>
<td>36,730</td><td>1.8029</td><td>66,220</td>
<td>90,000</td><td>1.4640</td><td>131,762</td>
</tr>
<tr>
<td>2006</td>
<td>38,532</td><td>1.7237</td><td>66,416</td>
<td>94,200</td><td>1.3997</td><td>131,851</td>
</tr>
<tr>
<td>2007</td>
<td>40,400</td><td>1.6488</td><td>66,613</td>
<td>97,500</td><td>1.3389</td><td>130,545</td>
</tr>
<tr>
<td>2008</td>
<td>41,452</td><td>1.6118</td><td>66,810</td>
<td>102,000</td><td>1.3088</td><td>133,500</td>
</tr>
<tr>
<td>2009</td>
<td>40,946</td><td>1.6364</td><td>67,005</td>
<td>106,800</td><td>1.3289</td><td>141,922</td>
</tr>
<tr>
<td>2010</td>
<td>42,037</td><td>1.5986</td><td>67,202</td>
<td>106,800</td><td>1.2982</td><td>138,645</td>
</tr>
<tr>
<td>2011</td>
<td>43,481</td><td>1.5501</td><td>67,399</td>
<td>106,800</td><td>1.2587</td><td>134,433</td>
</tr>
<tr>
<td>2012</td>
<td>44,969</td><td>1.5031</td><td>67,595</td>
<td>110,100</td><td>1.2206</td><td>134,390</td>
</tr>
<tr>
<td>2013</td>
<td>45,677</td><td>1.4842</td><td>67,793</td>
<td>113,700</td><td>1.2052</td><td>137,033</td>
</tr>
<tr>
<td>2014</td>
<td>47,435</td><td>1.4333</td><td>67,988</td>
<td>117,000</td><td>1.1639</td><td>136,177</td>
</tr>
<tr>
<td>2015</td>
<td>49,227</td><td>1.3851</td><td>68,185</td>
<td>118,500</td><td>1.1248</td><td>133,285</td>
</tr>
<tr>
<td>2016</td>
<td>49,927</td><td>1.3696</td><td>68,382</td>
<td>118,500</td><td>1.1122</td><td>131,796</td>
</tr>
<tr>
<td>2017</td>
<td>51,799</td><td>1.3239</td><td>68,577</td>
<td>127,200</td><td>1.0751</td><td>136,750</td>
</tr>
<tr>
<td>2018</td>
<td>53,831</td><td>1.2776</td><td>68,775</td>
<td>128,400</td><td>1.0375</td><td>133,212</td>
</tr>
<tr>
<td>2019</td>
<td>56,007</td><td>1.2315</td><td>68,970</td>
<td>132,900</td><td>1.0000</td><td>132,900</td>
</tr>
<tr>
<td>2020</td>
<td>57,754</td><td>1.1976</td><td>69,167</td>
<td>137,700</td><td>1.0000</td><td>137,700</td>
</tr>
<tr>
<td>2021</td>
<td>63,068</td><td>1.0998</td><td>69,364</td>
<td>142,800</td><td>1.0000</td><td>142,800</td>
</tr>
<tr>
<td>2022</td>
<td>66,609</td><td>1.0443</td><td>69,560</td>
<td>147,000</td><td>1.0000</td><td>147,000</td>
</tr>
<tr>
<td>2023</td>
<td>69,756</td><td>1.0000</td><td>69,756</td>
<td>160,200</td><td>1.0000</td><td>160,200</td>
</tr>
<tr>
<td>2024</td>
<td>72,233</td><td>1.0000</td><td>72,233</td>
<td>168,600</td><td>1.0000</td><td>168,600</td>
</tr>
<tr style="background-color:#ffffff;"><td colspan="3" style="text-align:right">Highest-35 total&nbsp;</td>
<td>2,333,744</td><td colspan="2" style="text-align:right">Highest-35 total&nbsp;</td>
<td>4,767,584</td></tr>
<tr style="background-color:#ffffff;"><td colspan="3" style="text-align:right">AIME&nbsp;</td><td>5,556</td>
<td colspan="2" style="text-align:right">AIME&nbsp;</td><td>11,351</td></tr>
</table>
</div>
<div class="ninetypercent">Note: Nominal earnings for case B
are limited by the <a href="../COLA/cbb.html">contribution and benefit base</a>
for all years. Case B is an example of a person who has earned at or above
the maximum taxable amount in each year.</div>
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