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Subject:  Re: Study on early claiming of SS Date:  9/5/2018  4:31 PM
Author:  MCCrockett Number:  20711 of 21950

Art53: What is "PIA?" Pain in the ass? <grin> No seriously, I don't know what PIA is?

PIA is an acronym for Primary Insurance Amount.

The year that you turn 60, the National Average Wage Index is used to normalize your earnings in all years before age 60. Starting at age 60, your earnings are not indexed. The sum of the 35 years with the highest earnings are divided by 420 to produce your Average Indexed Monthly Earnings (AIME). Should you have fewer than 35 years of earnings, $0.00 is used for the missing years.

The AIME is used in the PIA formula to calculate your PIA. The PIA formula skews the results so that individuals with low income receive more than those with high income. The PIA is then adjusted for early or late claiming of benefits.

The PIA is then multiplied by the COLA for each year the individual delays claiming benefits. If you retire at 62 but don't claim Social Security benefits until Full Retirement Age (FRA), your monthly benefit at FRA will be greater than if you claimed benefits at 62. Your PIA won't be reduced by early retirement factors and all earned COLA will be applied to the larger PIA.

However, the largest benefit comes from continuing to work as it eliminates your lowest earning years from the AIME and PIA calculations. Also, it gives you more years to add to your 401(k) or IRA and to pad your "emergency" fund. Mine currently stands at 3-4 years of normal living expenses.

As an aside, I had a challenging, mentally stimulating, and fun job. I wasn't in a rush to retire and claim Social Security benefits. I did retire earlier than I had planned after receiving a "heads up" with a woman I had worked with in HR about planned changes to our retirement plan. In addition, she clued me into the fact that the Pension Protection Act required my pension benefits had to be recalculated as I was over our plan's retirement age of 65. I got a 21% increase in pension benefits for retiring at 68.
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