Social Security retirement benefits are calculated using a progressive formula with 'bend points' that favor lower earners. The 2026 formula: 90% of average indexed monthly earnings (AIME) up to the first bend point ($1,226), 32% from the first to second bend point ($7,391), and 15% above. A high earner's Social Security replaces a smaller percentage of pre-retirement income than a low earner's. Strategy implication: high earners must save more privately because Social Security replaces less of their lifestyle. The bend points adjust annually with national wage growth, so estimates need periodic updating.
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Social Security Bend Points
August 22, 2026 · Aditya Gupta
Personal Finance
Related terms
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A 403(b) plan is a retirement plan for employees of public schools, nonprofit hospitals, charities, and religious organizations…
457(b)
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