5 little-known facts about Social Security

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How are payouts calculated?
How are payouts calculated? © iStock

How are payouts calculated?

The size of your monthly check is arrived at by a series of calculations.

Your primary insurance amount, or PIA -- the benefit you would get at full retirement age -- determines the size of your monthly retirement check. According to the Social Security Administration's website, the PIA is based on the Average Indexed Monthly Earnings, or AIME, as applied to an inflation-adjusted formula. The PIA is then adjusted for whether you take retirement before or after your normal retirement age -- 66 for those now reaching retirement age, but gradually adjusted to age 67 for those born after 1960.

You can begin drawing reduced Social Security as early as 62. For every month you delay after reaching full retirement age, up to age 70, the monthly benefit increases.

In keeping with the original intent behind Social Security -- a way to lift seniors out of poverty -- lower-wage earners get a higher proportion of their earnings than higher-wage earners. The maximum monthly benefit that can be received in 2016 is $2,639 for a worker retiring at full retirement age.


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