Social Security 2027 Bend Points: $1,340, $8,077, PIA Formula

The formula and the 2027 numbers next to 2026

SSA’s notice states the rule for the PIA in three lines: “(a) 90 percent of the first $1,340 of their AIME, plus (b) 32 percent of their AIME between $1,340 and $8,077, plus (c) 15 percent of their AIME above $8,077.” The amount is then rounded down to the next multiple of $0.10. The percentages are written into section 215(a)(1)(A) of the Social Security Act (42 U.S.C. 415); only the dollar bend points change each year. The AIME is the number your own earnings record produces; the rest of this page shows how.

Source: Federal Register notices 2025-19763 (November 3, 2025) and 2026-21796 (October 26, 2026), “Cost-of-Living Increase and Other Determinations”; the change column is our arithmetic. Every row is in the CSV.

All of these move together because they are all products of one number, the national average wage index. That is why the bend points, the quarter of coverage and the taxable maximum rise by about the same 4.2%. The 3.6% COLA, which is based on consumer prices, is a separate adjustment; our 2027 COLA guide covers it and the earnings test.

Where the bend points come from, and how we checked them

SSA’s notice shows the whole calculation: “Multiplying the 1979 amounts of $180 and $1,085 by the ratio of the national average wage index for 2025 ($72,800.33) to that for 1977 ($9,779.44) produces the amounts of $1,339.96 and $8,076.98. We round these to $1,340 and $8,077.” The index used is the one for the second calendar year before the year of eligibility, which the statute states in section 215(a)(1)(B)(ii).

We re-ran that calculation for every eligibility year from 1980 to 2027 using SSA’s published wage index series and compared the result with SSA’s bend point table. All 48 years match to the dollar (our arithmetic). Two things follow.

• The bend points can fall. The wage index fell by 1.5% from 2008 to 2009, so the 2011 bend points were $749 and $4,517, below the $761 and $4,586 of 2010 (our arithmetic from SSA’s tables).
• Jumps follow the wage index, not inflation. The 2023 bend points rose 8.9% over 2022 ($1,115 against $1,024) because the 2021 wage index rose 8.9% over 2020 (our arithmetic).

Source: SSA Office of the Chief Actuary, “Benefit Formula Bend Points” (ssa.gov/oact/cola/bendpoints.html); the change column is our arithmetic. The CSV has every year from 1979 to 2027. Our maximum benefit guide shows what a maximum earner gets from the same formula.

From earnings to AIME: the indexing step

The AIME is not an average of what you were paid. SSA’s notice describes it: “We then select the number of years with the highest indexed earnings, add the indexed earnings for those years, and divide the total amount by the total number of months in those years. We then round the resulting average amount down to the next lower dollar amount.” For old-age benefits the number of years is 35: the years after the year you turn 21 and before the year you turn 62 (at most 40), less 5 (42 U.S.C. 415(b)(2)(A)(i)).

Each past year’s earnings are multiplied by the wage index of the indexing year divided by the wage index of the year earned. The indexing year is the second year before you turn 62. SSA’s example: “If a person reaches age 62 in 2027, for example, then 2027 is the person’s year of eligibility,” and the person’s earnings are indexed “to the average wage index for 2025, or 72,800.33.” Earnings after the indexing year are used at face value, not indexed (42 U.S.C. 415(b)(3)(B)). Four sample years for a 2027 retiree (our arithmetic, wage index values from SSA):

Source: SSA Office of the Chief Actuary, “National Average Wage Index” series; the factors and indexed amounts are our arithmetic. Only wages up to each year’s taxable maximum count.

In this example the 1995 salary of $30,000 is worth about the same in the formula as the 2025 salary of $90,000. That is the point of indexing: it asks how you ranked against the average earner of the time. Earnings above the taxable maximum ($192,300 in 2027) never count; our COLA guide shows the maximum by year.

Three worked examples for a 2027 eligibility year

To keep the arithmetic readable we use three stylized workers who each earn a fixed share of the national average wage in every one of 35 years, so each year indexes to the same amount. The shares (45%, 100% and 160%) are our assumption, not SSA’s, and we assume no year is above the taxable maximum. The 2027 taxable maximum is 2.64 times the 2025 wage index (our arithmetic), so 160% is well under it today.

The 100% worker, step by step (our arithmetic): $72,800.33 x 35 years / 420 months = $6,066.69, which rounds down to an AIME of $6,066. Then 90% of $1,340 is $1,206.00; 32% of the $4,726 between $1,340 and $6,066 is $1,512.32; nothing is above $8,077. The sum is $2,718.32, rounded down to $2,718.30.

The 160% worker crosses the second bend point: 90% of $1,340 is $1,206.00; 32% of the $6,737 between $1,340 and $8,077 is $2,155.84; 15% of the $1,629 above $8,077 is $244.35. The sum is $3,606.19, so the PIA is $3,606.10. The worker earns 3.6 times as much as the 45% worker and gets 2.2 times the benefit (our arithmetic). That is the three-rate formula doing what it was built to do.

Two reference points on the same formula: an AIME of exactly $1,340 gives $1,206.00, and an AIME of exactly $8,077 gives $3,361.80. Past that, each extra dollar of AIME adds 15 cents (our arithmetic). The PIA is the benefit at full retirement age, which the notice says is 67 for anyone born in 1960 or later; claiming earlier or later changes the check, not the PIA. See our claiming-age chart.

What zero years cost: the case for a reader with rental income

Because the average is over 35 years, a worker who stops covered work early has zeros in the average. This matters to a reader who left a salary at 50 or 55 to live on rentals and fund distributions. Using the 100% worker (our arithmetic, 2027 formula):

Source: our arithmetic from the 2027 formula in notice 2026-21796; each case assumes the covered years are at 100% of the average wage and the others have no covered earnings.

At this AIME each missing year costs about $55 a month, because each year is one 35th of the total and the marginal rate is 32%. Another way to see it: $1,000 of additional indexed earnings in one of the 35 years adds $2.38 to the AIME and $0.76 a month to the PIA (our arithmetic). Below the first bend point the same $1,000 is worth $2.14 a month.

What counts as earnings is defined narrowly. Section 211(a) of the Act (42 U.S.C. 411) says: “There shall be excluded rentals from real estate and from personal property leased with the real estate,” unless received in the course of a trade or business as a real estate dealer. It also excludes “dividends on any share of stock, and interest on any bond” unless received as a dealer in stocks or securities, and “the distributive share of any item of income or loss of a limited partner, as such,” other than guaranteed payments for services. Gains from the sale of a capital asset are excluded as well. A passive landlord, a REIT shareholder and a limited partner in a fund therefore add nothing to the AIME or to the quarters of coverage from that income. Whether a particular rental is a trade or business is a tax question; see our earnings test page, which applies the same distinction to the earnings limit, and our guide to taxable benefits for the income tax side.

Does the COLA change the bend points? Two cohorts compared

No, and the notice is explicit about who gets what: for workers “for whom eligibility for benefits (that is, the worker’s attainment of age 62, or disability or death before age 62) occurred before 2027, benefits will increase by 3.6 percent beginning with benefits for December 2026,” and “For those first eligible after 2026, the 3.6 percent increase will not apply.”

So a worker who turns 62 in 2026 is on the 2026 formula plus 3.6%, and a worker who turns 62 in 2027 is on the 2027 formula. For the 100% worker (our arithmetic): the 2026 cohort has an AIME of $5,820 ($69,846.57 x 35 / 420), a 2026 PIA of $2,608.20 (90% of $1,286 plus 32% of $4,534), and about $2,702 after the 3.6% (2,608.20 x 1.036, before SSA’s rounding). The 2027 cohort starts at $2,718.30. The 2027 PIA is 4.2% above the 2026 PIA because wages rose 4.23%, and about 0.6% above the 2026 cohort after its COLA.

The family maximum for 2027

The same notice resets the cap on what a worker’s family can receive. For a worker who reaches 62 or dies in 2027 it is 150% of the first $1,712 of PIA, plus 272% of PIA from $1,712 to $2,471, plus 134% from $2,471 to $3,223, plus 175% above $3,223, rounded down to the dime. For the 100% worker with a PIA of $2,718.30 (our arithmetic): $2,568.00 + $2,064.48 + $331.38 = $4,963.86, so $4,963.80. That is 1.83 times the worker’s own PIA. Spouse, child and survivor benefits are all paid within this cap; see spousal and ex-spouse benefits and survivor benefits.

Quarter of coverage: $1,970 in 2027 and the 40-credit test

SSA’s notice says that “The earnings required for a quarter of coverage in 2027 is $1,970.” The statute credits one quarter for each portion of a year’s wages and self-employment income that equals the amount, and “no more than four quarters of coverage may be credited to any calendar year after 1977” (42 U.S.C. 413). A person with 40 quarters is fully insured under 42 U.S.C. 414(a)(2), which is the usual retirement test. Our arithmetic: $7,880 of covered earnings in 2027 earns all four credits for the year, so 40 credits are ten years at that level; the amount has risen from $250 in 1978 and $780 in 2000.

Source: SSA Office of the Chief Actuary, “Quarter of Coverage” table; Federal Register notice 2026-21796 for 2027. The four-quarter column is our arithmetic. The CSV has every year from 1978.

The same wage index also sets two coverage thresholds in the notice: $3,100 in 2027 for domestic workers (from $3,000) and $2,700 for election officials and election workers.

What a reader can do with this

• Find your year of eligibility. It is the year you turn 62 (or become disabled, or the worker dies), not the year you claim. That year picks the bend points and the wage index to which your earnings are indexed.
• Check your own record. SSA’s my Social Security account shows your yearly covered earnings and your estimated benefit. Count the years with zero covered earnings: each is a zero in the 35-year average, as the table above shows.
• Separate work income from investment income. Rentals, dividends, capital gains and a limited partner’s K-1 do not build the AIME. If you are deciding whether to keep a part-time job or consulting income for a few more years, the arithmetic above shows what replacing a zero year is worth at your level.
• Do not model a later year’s bend points. The 2028 bend points are set from the 2026 wage index, which SSA must publish by November 1, 2027 under the same notice process; any 2028 figure before then is a guess.
• Then pick a claiming age. The PIA is the starting point; our claiming age chart applies the reduction and the increase.

This is analysis of public documents, not investment, legal or tax advice.

FAQ

Sources, read and saved on October 29, 2026: Social Security Administration, “Cost-of-Living Increase and Other Determinations for 2027,” 91 Fed. Reg. 67380 (October 26, 2026), notice 2026-21796, and “Cost-of-Living Increase and Other Determinations for 2026,” notice 2025-19763 (both on federalregister.gov); SSA Office of the Chief Actuary pages “Benefit Formula Bend Points,” “National Average Wage Index,” “Quarter of Coverage” and “Primary Insurance Amount” (read from Internet Archive copies because ssa.gov blocks automated requests); 42 U.S.C. 411, 413, 414 and 415 (law.cornell.edu). Worked examples, change columns, re-derivation of the bend points and cohort comparisons are our arithmetic from those formulas.