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Social Security Bend Points Explained

i love deep blue by JennyHuangOkay, you’ve probably already guessed that this has nothing to do with deep-sea diving, but I’m pretty sure I would have disappointed my seven loyal fans readers (okay, it’s really more like two or three – Hi, Mom!) if I hadn’t made the pun.  Bend points are the portions of your average income (Average Indexed Monthly Earnings – AIME) in specific dollar amounts that are indexed each year, based upon an obscure table called the Average Wage Index (AWI) Series.  They’re called bend points because they represent points on a graph of your AIME graphed by inclusion in calculating the PIA.

If you’re interested in how Bend Points are used, you can see the article on Primary Insurance Amount, or PIA.  Here, however, we’ll go over how Bend Points are calculated each year.  To understand this calculation, you need to go back to 1979, the year of the Three Mile Island disaster, the introduction of the compact disc and the Iranian hostage crisis.  According to the AWI Series, in 1979 the Social Security Administration placed the AWI figure for 1977 at $9,779.44 – AWI figures are always two years in arrears, so for example, the AWI figure used to determine the 2010 bend points is from 2008.

With the AWI figure for 1977, it was determined that the first bend point for 1979 would be set at $180, and the second bend point at $1,085.  I’m not sure how these first figures were calculated – it’s safe to assume that they are part of an indexing formula set forth quite a while ago.  At any rate, now that we know these two numbers, we can jump back to 2008’s AWI Series figure, which is $41,334.97.  It all becomes a matter of a formula now:

Current year’s AWI Series divided by 1977’s AWI figure, times the bend points for 1979 equals your current year bend points

So here is the math for 2010’s bend points:

$41,334.97 / $9779.44 = 4.2267

4.2267 * $180 = $760.81, which is rounded up to $761 – the first bend point

4.2267 * $1,085 = $4,585.96, rounded to $4,586 – the second bend point

And that’s all there is to it.  Hope this helps you understand the bend points a little better.

Photo by JennyHuang
Social Security Owner's ManualThe latest edition of A Social Security Owner's Manual, 2013 Edition, can be purchased by clicking this link. If you'd prefer the Kindle version (and let's face it, ALL the cool kids do!), you can find that at this Kindle version link.


  1. [...] the Average Indexed Monthly Earnings or AIME) of $7,681. Applying the bend points to this (see the Bend Point article for details) we come up with a tentative PIA of $2,293. To this we apply the COLAs from the point [...]

  2. Social Security Bend Points Explained - Business News Online says:

    [...] Social Security Bend Points Explained [...]

  3. Social Security Bend Points Explained… Great informative blog post..

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