Primary Insurance Amount (PIA)
The Primary Insurance Amount (PIA) is the monthly Social Security benefit a worker receives if they claim benefits at their Full Retirement Age (FRA). It is calculated using a progressive formula applied to the worker's Average Indexed Monthly Earnings (AIME), with three "bend points" that provide higher replacement rates for lower earners.
Exam Tip
PIA = benefit at FRA. Three bend points: 90%, 32%, 15% (progressive). Based on 35 highest years. Spousal = 50% of PIA. Early claiming reduces PIA ~6-7%/year. Delayed credits add 8%/year up to 70.
What is the Primary Insurance Amount?
The Primary Insurance Amount (PIA) is the foundational calculation for Social Security retirement, disability, and survivor benefits. It represents the monthly benefit a worker would receive at their Full Retirement Age (FRA). All other benefit calculations (early retirement, delayed credits, spousal benefits) are based on the PIA.
The PIA Formula
The PIA uses a progressive three-tier formula applied to Average Indexed Monthly Earnings (AIME):
2025 Bend Points
| AIME Range | Replacement Rate |
|---|---|
| First $1,226 | 90% |
| $1,226 - $7,391 | 32% |
| Over $7,391 | 15% |
2026 Bend Points
| AIME Range | Replacement Rate |
|---|---|
| First $1,286 | 90% |
| $1,286 - $7,749 | 32% |
| Over $7,749 | 15% |
PIA Calculation Example (2025)
| Component | Calculation |
|---|---|
| AIME | $6,000/month |
| First Bend Point | $1,226 x 90% = $1,103.40 |
| Second Bend Point | ($6,000 - $1,226) x 32% = $1,527.68 |
| Third Bend Point | $0 (AIME below $7,391) |
| PIA | $2,631.08/month |
How Benefits Relate to PIA
| Benefit Type | Calculation from PIA |
|---|---|
| At FRA | 100% of PIA |
| At 62 (FRA 67) | ~70% of PIA |
| At 70 | 124% of PIA (8%/year delayed credits) |
| Spousal (at FRA) | 50% of worker's PIA |
| Survivor (at FRA) | 100% of worker's PIA |
Key Components in PIA Calculation
| Step | Description |
|---|---|
| 1. Earnings History | 35 highest-earning years |
| 2. Wage Indexing | Adjust for wage growth |
| 3. AIME Calculation | Sum / 420 months |
| 4. Apply Formula | Use bend points |
| 5. COLA Adjustments | Annual increases |
Why PIA Matters
| Planning Area | PIA Relevance |
|---|---|
| Claiming Strategy | Base for early/delayed calculations |
| Spousal Benefits | 50% of higher earner's PIA |
| Survivor Planning | Determines survivor benefit |
| Break-Even Analysis | Compare claiming ages |
CFP Exam Focus
CFP candidates should understand:
- PIA = benefit at Full Retirement Age
- The progressive three-tier formula favors lower earners
- Bend points adjust annually with wage indexing
- All other benefits derive from the PIA
- 35 highest-earning years used in calculation
- Spousal benefit = 50% of worker's PIA at FRA
Study This Term In
Related Terms
Full Retirement Age (FRA)
Full Retirement Age (FRA) is the age at which a person can receive full, unreduced Social Security retirement benefits - age 67 for those born in 1960 or later.
Delayed Retirement Credits
Delayed Retirement Credits are permanent increases to Social Security benefits for delaying past Full Retirement Age, adding 8% per year up to age 70.
Windfall Elimination Provision (WEP)
The Windfall Elimination Provision (WEP) was a Social Security formula that reduced benefits for workers who earned pensions from employment not covered by Social Security while also qualifying for Social Security benefits from other covered work. The WEP was REPEALED by the Social Security Fairness Act, signed into law on January 5, 2025, with retroactive benefits back to January 2024.