A&I Wealth Management > Blog > Social Security Bend Points

Social Security Retirement Income (SSRI) provides a safety net for Americans. SSRI is also divisive–many people feel like it won’t be around when they need it! Read on to learn about how much SSRI pays, to whom, and a high-level overview of how it works.

Did you know that in the year 2022:

  • The average monthly SSRI payment was $1,825.
  • SSRI payments were 4.8% of the United States GDP, and expected to rise.
  • Only 17% of Americans are confident that SSRI will continue to provide benefits of at least equal value to the benefits received by retirees today.

How are Social Security Benefits calculated?

Social Security Retirement Income benefits depend upon the Average Indexed Monthly Earnings, or AIME. 35 years of employment history determine AIME. For details on how AIME is calculated, contact your financial planner.

In 2023, Social Security benefits are calculated by replacing AIME.

  • 90% of the first $1,115/month, plus
  • 32% of the next $6,721/month, plus
  • 15% up to $13,350/month

SSRI pays more money to higher earners, but at a decreasing rate. As a percentage of income, Social Security benefits pay the most to the lowest earners. For example, a person who only earned $12,000 per year would have AIME of $1,000 per month and an SSRI benefit of $900 per month–or 90% of his employment income.

On the other hand, a person whose average monthly earnings had been $20,000 would have an AIME of $13,350 in 2023. Importantly, the AIME is indexed for inflation, so it would have been a much lower number in prior years. If this person had 35 years of income above the maximum, then she would receive the maximum monthly SSRI. In 2023, the maximum monthly SSRI benefit is $3,627. As a percentage of this person’s income, she receives only 18%. Thus, she needs do some financial planning!

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About the author

Karl Frank, Certified Financial Planner ®, MSF, MBA, MA, is the President of A&I Financial Services LLC, a local business that specializes in wealth management, insurance planning, and retirement planning. Karl cares for business owners and the businesses that care for them. Learn More about Karl.