Social Security calculates your disability and retirement benefit amount based on the Social Security taxes that have been paid on a wage-earner’s income. These Social Security taxes are also referred to as “covered earnings.” It is these earnings over your years of contributions that supply the amount that represents a wage-earner’s average indexed monthly earnings. Social Security then applies a formula to the average indexed monthly earnings to calculate an individual’s primary insurance amount (also known as the PIA). The PIA is the full retirement amount if benefits were taken right at a Claimant’s Full Retirement Age (ie. not taken early or taken late). The PIA formula is the sum of fixed percentages of varying amounts of a worker’s income. SSA refers to these as “bend points,” and they are changed every year. In 2019, 90% of the first $926 of your AIME is added to 32% of your AIME from $926 to $5,583 which is then added to 15% of your AIME over $5,583. Each of these three amounts added together comprises the PIA.