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Describe the Benefits of the Social Security Program

Social Security benefits are calculated using the worker’s AIME to determine the primary insurance amount (PIA). The PIA is the basis for determining the amount of benefits that are actually to be paid. Typically, the thirty-five years during which earnings were the highest are used to compute the AIME. To determine your benefit, you must know your PIA your FRA, and the age at which benefits will begin.

Benefits Received Before FRA

You may choose to begin receiving Social Security Benefits before your FRA (Full Retirement Age). However, if you choose this option, the benefits you will receive from Social Security and those of your spouse will be reduced according to specific formulas. Benefits received up to thirty-six months before FRA will be reduced by a maximum of 20 percent (five-ninths of 1% per month for each month you began receiving benefits before your FRA). Additional reductions of 5 percent per year will be effective when the full retirement age exceeds age sixty-five. Note that once you begin receiving benefits, this reduction will remain through the remainder of your life. Retirement or disability benefits paid to a spouse who is sixty-two will be reduced by a maximum of 25 percent.

Benefits Received after FRA

Delaying payment beyond full retirement age results in a benefit increase for each year of delay. You may delay benefits after age sixty-seven up to age seventy and receive credits amounting to the following percentages per year of delay:


Year Born Percentage Increase
1935-36 6.0%
1937-38 6.5%
1939-40 7.0%
1941-42 7.5%
1943 or later 8.0%


There are four main types of Social Security benefits: retirement benefits, disability benefits, survivors’ benefits, and Medicare benefits. These four main types of Social Security benefits are discussed in detail in the following paragraphs.


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