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Figuring the AME Under the Simplified Old-Start Formula

Excerpted from "Social Security Handbook". See the up-to-date, official Social Security Handbook at ssa.gov.

709. Figuring the AME Under the Simplified Old-Start Formula

709.1 How does SSA compute the AME under the simplified old-start formula for earnings after 1950?

Under the simplified old-start formula, your AME is figured by determining your base year earnings. Base years are determined the same way as under the AME formula (see §705). Earnings are used and credited up to the annual maximums. When eligibility is after 1978, earnings in and after the year of eligibility cannot be included.

709.2 How does SSA compute AME under the simplified old-start formula for earnings before 1951?

To compute your AME under the simplified old-start formula for earnings before 1951, we perform the steps below:

  1. Add up your total pre-1951 earnings. This includes earnings posted to your earnings record plus any military wage credits, earnings under railroad retirement transferred to Social Security, and wages if you were an intern in the U.S. during World War II;

  2. Divide this total by either: (a) the number of years passed since you turned 20 and prior to 1951; or (b) one, if you turned 21 after 1949. The result is your earnings in each year used in the divisor.

    1. We may not credit more than $3,000 to each of these years. We credit any remainder under $3,000 either: (a) to the year in which you turned 20 (if you turned 20 before 1951); or (b) to 1949, if you turned 21 after 1949. If there is anything left over more than $3,000, we credit this amount, in $3,000 increments, to the year in (a) and each consecutive preceding year.

    2. We may not credit more than $42,000 ($3,000 a year) to the period 1937 through 1950.

  3. Divide your highest computation years by the number of months in the computation years to determine your AME.

Last Revised: Sep. 22, 2003

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