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How SS benefits are calculated
 Quote:
For an individual who first becomes eligible for old-age insurance benefits or disability insurance benefits in 2007, or who dies in 2007 before becoming eligible for benefits, his/her PIA will be the sum of:
(a) 90 percent of the first $680 of his/her average indexed monthly earnings, plus
(b) 32 percent of his/her average indexed monthly earnings over $680 and through $4,100, plus
(c) 15 percent of his/her average indexed monthly earnings over $4,100.
We round this amount to the next lower multiple of $.10 if it is not already a multiple of $.10.
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I got the above from http://www.ssa.gov/OACT/COLA/piaformula.html but I became aware of it in the Scott Burns article below. I had never given any thought to exactly how SS benefits were calculated and I was a bit surprised that there were 3 different levels of calculation. It is now clear to me who SS benefits are more beneficial to the less fortunate. I can see FDR's hand it the formula.
http://www.dallasnews.com/sharedcontent/dws/bus/scottburns/columns/2006/stories/DN-burns_07bus.ART.State.Edition1.316ac96.html
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