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Average Indexed Monthly Earnings (AIME)
Social Security retirement benefits are computed using a worker’s average indexed monthly earnings (“AIME”), which summarizes up to 35 years of a worker’s indexed earnings history.
Using earnings for the highest-paying 35 years, these figures are added together and then divided by the number of months in 35 years (35 years X 12 months = 420 months) to arrive at a person’s “AIME.”
If the worker does not have 35 years of income history, the Social Security Administration assigns each missing year an income value of $0.
The “AIME” accounts for wages on which FICA taxes have been paid and adds a weighting factor for inflation and cost-of-living increases over those years.