The PIA value is the monthly Social Security benefit a client will receive if they file for income at their full retirement age. At full retirement age, the benefit is neither reduced by an early withdrawal penalty nor is it increased with a delay credit. The Social Security Administration will calculate and supply this amount for eligible clients.
For a walkthrough of the data entry process for Social Security Retirement Income, click here.
How PIA is Calculated
The Social Security PIA value is based on each eligible client's averaged monthly earnings, adjusted for wage growth. The average indexed monthly earnings (AIME) are separated into three amounts, or "bend points". These amounts change based on when a client reaches age 62. Each amount is multiplied by a specific factor, and the sum of all three amounts will equal the client's PIA value which can be increased or decreased depending on other variables. Here are links that illustrate PIA bend points, and PIA Formula.
The first bend point of the AIME is $1,174. Therefore all earnings up to this amount are multiplied by 90%.
- The second bend point represents AIME between $1,174 and $7,078 which is multiplied by 32%.
- While any remaining AIME above $7,078 is multiplied by 15%.
When allowing RightCapital to estimate a client's Social Security benefit (via the 'Simple Estimate' or 'Historical Covered Earnings' options), the client's birthday, earnings, and family profile will be used to estimate a PIA value for the plan. This PIA value is then adjusted for filing age and other adjustments.
PIA Recomputation
If a client receives large amounts of income into their 60s, the issued PIA value can be increased due to recomputation. For example, if a client decides to work until age 70; not only can they get delay credits on their retirement benefit, but their PIA can increase because their earnings between ages 60 to 70 are high enough to impact the highest 35 years of earnings used when calculating PIA.
RightCapital will only factor in recomputation when the client's estimated benefit is calculated using the 'Simple Estimate' or the 'Historical Covered Earnings' approach. If a client is entering their assigned PIA value using the “Based on SS Statement Value” option, RightCapital will not automatically factor in recomputation.
