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Retired Military Finances 101: How to Estimate Your Future Social Security Benefits

Retirement Funding

Many Retired Military Officers May Want to Estimate Social Security Benefits

One of the benefits of being a retired military officer is the fact that the military pension is a fair bit of money. In fact, in many parts of the country it may be enough to live on. When you add in Social Security the picture looks even better. This may trigger thoughts of early retirement. Certainly something worth considering. But if you count on the estimate you from Social Security to determine how much you will receive from them, you might be setting yourself up for a surprise. That is because the Social Security Administration assumes you will continue to earn at the same level from now until your Full Retirement Age (FRA). For most not already retired, that will be until age 66 or 67. In effect, the Social Security Administration will overstate your estimated benefit, if you retire early. So...you might want to do your own estimate.

What is the PIA Formula?

If deciding to receive benefits at the normal retirement age, the “primary insurance amount” (PIA) is  the monthly benefit you would receive.3 For those eligible in 2020, your PIA is the sum of three different portions of your average indexed monthly earnings (AIME), which must be adjusted for inflation:4

  • 90 percent of your first $960 average indexed monthly earnings 
  • 32 percent of your average indexed monthly earnings between $960 and up to $5,785
  • 15 percent of your average indexed monthly earnings over $5,7853

To find your average indexed monthly earnings, you’ll need the years with the highest indexed earnings from 35 years of earnings, which you can find on your Social Security statement. Once you have those high-earning years, you can find the average, which is your AIME (remember to adjust for inflation).

How Can I Estimate My Retirement Benefits? 

Once you have your AIME, you can calculate the percentages of the three different sections of your AIME and add them up, based on the PIA formula. 

However, bear in mind that your actual benefits may look different from your estimate. This is because laws regarding benefit amounts may change and your earnings may continue to alter over time. In addition, your benefits will be adjusted for living costs at the time you start receiving benefits.5

3 Factors That Impact Your Retirement Benefits

1. Lifetime Earnings

Since your benefits are a sum of percentages based on your earnings, higher lifetime earnings mean higher benefits, whereas lower earnings, or gaps in earnings, results in lower benefits.2 As mentioned above, if you stop working before your FRA, you could end up with lower benefits. On the other hand, if you have 35 "good" years, stopping work may not affect your benefits that much.

2. Age

If you opt to receive benefits before your full retirement age, your benefits will be lower. On the other hand, if you wait to receive retirement benefits until after your full retirement age, your benefits might be higher.2

3. Employment

Paying for social security looks different for those who are self-employed, work for a federal, state, or local government, or work outside of the United States.2 If you are in one of those categories, it’s important to understand how this may affect your benefits during retirement.

Preparing for your post-work days may also look like reflecting on what you want your lifestyle to be during that time. By estimating your Social Security payments, you have a better idea of the other steps you might need to take, such as opening a retirement savings account, so you can experience your envisioned retirement.


  1. https://www.ssa.gov/news/press/factsheets/basicfact-alt.pdf
  2.        
  3. https://www.ssa.gov/planners/retire/r&m6.html
  4.        
  5. https://www.ssa.gov/oact/COLA/piaformula.html
  6.        
  7. https://www.ssa.gov/oact/progdata/retirebenefit2.html
  8.        
  9. https://www.ssa.gov/benefits/retirement/estimator.html


If you found this article useful, you might like the following blog posts:

Potential Retirement Surprise Waiting for Some Military Spouses: GPO


Military Finances 201: Take Social Security Early and Invest It?


Another "Round" of Social Security for All My Friends!


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