Podcast Episode 6 – Why You NEED To Understand Social Security Nomenclature

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.



Unfortunately, these are the acronyms used regularly in regards to YOUR Social Security benefits.

You really need to understand how these topics work together because many retirees rely heavily on Social Security. In fact, there are studies done that shows Social Security provides MOST of the income for retirees!

Given that, doesn’t it make sense to understand the Social Security system and how works? Doesn’t it also make sense to understand how the system can benefit you?

I believe it does.

So, in this episode we discuss:
***AIME – Averaged Indexed Monthly Earnings
***PIA – Primary Insurance Amount
***FRA – Full Retirement Age
*** DECs – Delayed Earnings Credits

We also discuss what happens when you file early, but I am not aware of any acronym that identifies that. So, consider that a bonus!

As ways, go to my website at www.heritagewealthplanning.com to learn more.



Go HERE for the video version of this episode.

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