Social Security Q&A: Explaining How Retirement Benefits Are Calculated

Social Security Q&A: Explaining How Retirement Benefits Are Calculated

Question: How are my retirement benefits calculated?

Answer: Your Social Security benefits are based on earnings averaged over your lifetime. Your actual earnings are first adjusted or “indexed” to account for changes in average wages since the year the earnings were received.

Then Social Security calculates your average monthly indexed earnings during the 35 years in which you earned the most.

Social Security applies a formula to these earnings and arrives at your basic benefit. This is the amount you would receive at your full retirement age.

You may be able to estimate your benefit by using the Retirement Estimator at, which offers estimates based on your Social Security earnings.

Q: My dad, who is receiving Supplemental Security Income, will be coming to live with me.

Does he have to report the move to Social Security?

A: Yes. An SSI beneficiary must report any change in living arrangements within 10 days after the month the change occurs.

If the change is not reported, your dad could receive an incorrect payment.

Also, your dad needs to report his new address so that he can receive mail from Social Security.

Even if benefits are paid by direct deposit, Social Security needs to be able to get in touch with him.

He can report the change by telephone, mail, or in person at any Social Security office. Keep in mind that failing to report a change to Social Security could result in incorrect payments that may have to be paid back or a penalty deducted from SSI benefits.

Call 1-800-772-1213 (TTY 1-800-325-0778).

You can get more information in the booklet Understanding SSI, at

This column was prepared by the Social Security Administration. For fast answers to specific Social Security questions, contact Social Security toll-free at 800-772-1213 or visit

Author: Tribune News Service

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