Podcast Episode 31 – 3 Factors You Must Know Understand Social Security

Social Security checks are less than retirees expect according to a study reported on by USA Today. (The link to the article is below).

I have a couple problems with the article first. To begin with it says “future retirees who were surveyed expect to receive $1,628 on average each month. But those surveyed who are already in retirement say they are only collecting $1,257.

“That’s a big difference,” Ambrozy says. “It’s like taking a 25% pay cut.”

There’s absolutely nothing odd at all about what a future retiree EXPECTS from Social Security and what a current retiree RECEIVES.

Two completely separate issues there. Not sure why the author didn’t get that.

Secondly, the article states that the average Social Security check is only $1,410 a month. The implication is that if that is the average check and future retirees are banking on $1,628 a month, there is a big disconnect there.

Well, you need to ascertain WHO the average recipient is receiving that check and compare that person to WHO the future retiree is.

Is the average recipient 75 years old and the future retiree 55? That’s 20 years of difference. Can’t use an average for someone who’s already been receiving Social Security for over 10 years with someone who is 10 years away from receiving it! That’s bad journalism.

But, be it as it may, I still wanted to go over how you can figure out your future benefits. Remember, everything is based on your AIME, Averaged Indexed Monthly Earnings.

Your AIME is simply your 35 highest years of income, added together and then divided by 420. Once we get that number we apply the actual bend points to get your PIA. PIA is the amount of Social Security you’ll get at your Full Retirement Age.

Confusing? Don’t let it get you.  I walk through a few examples of how this works in the video.


Nationwide Retirement Institute released this incredibly important study about the ignorance of Americans regarding Social Security.

Most older adults think they are eligible for Social Security benefits sooner than they actually are, including 57 percent of future retirees.

Future retirees also expect to receive $1,628 on average as a monthly payment from Social Security. However, that’s almost 30 percent more than what current retirees say they collect ($1,257).

Concerningly, nearly nine in 10 (88 percent) older adults don’t know what factors determine the maximum Social Security benefit an individual can receive.

YIKES!  9 in 10 older adults don’t know what factors determine how to maximize Social Security??? That’s not good. I can only imagine the numbers would be nearly 95% or more if we factored in younger adults too.

So, in this episode, I share with you the THREE most critical factors you need to understand about Social Security:

  1. AIME – Averaged Indexed Monthly Earnings
  2. PIA – Primary Insurance Amount
  3. FRA – Full Retirement Age

Once you have these factors tattooed on your brain,  you then can start developing a plan of action in how to maximize your benefit.

But it makes no sense to do anything until you have a clear understanding of those three factors. EVERYTHING is contingent on those.

Need some help? Just contact me.

Song of the day – Hog Jaw “Gitsum”.  A great song for the Washington Capitals who have FINALLY beaten the Pittsburgh Penguins and now advance to the Eastern Conference Finals!


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