# The Primary Insurance Amount (PIA)

Just because there can be some confusion over the PIA, I am writing this particular article to help allay that confusion.  In an earlier article – Social Security’s PIA – What is this? – we worked through how PIA is calculated, I’m just giving it another treatment here, to help clarify.

### Primary Insurance Amount

As you know, the PIA is based upon your Average Indexed Monthly Earnings (AIME), which is the average of your highest 35 years of earnings, indexed for inflation, and expressed as a monthly figure.  The AIME then has bend points applied in the year that you reach age 62, calculating the Primary Insurance Amount (PIA).

This PIA is the projected benefit amount that you would receive upon reaching Full Retirement Age (FRA).  The actual amount that you receive if you take your benefit at FRA would likely be different due to Cost of Living Adjustments (COLAs) that would be applied between age 62 and FRA – but the PIA is not changed.

Likewise, if you do not work from age 62 to FRA or you work for lower wages than your AIME projection assumed (and you had fewer than 35 years of earnings as of age 62), your PIA at FRA could actually be a bit lower than the original projection.

### Calculating Benefits

When your actual benefits are calculated, your PIA is the starting point.  Then all COLAs are applied, if you’re older than age 62.  After this, your age when you initiated benefits is taken into account – if it was before FRA, there will be a reduction; if after FRA, an increase.  This increase or decrease is applied against the COLA-adjusted-PIA, resulting in your monthly benefit amount.

Hope this has helped to clear things up a bit.  Let me know if you have additional questions…

`Photo by batega / CC BY`

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