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One of the key components that the Social Security Administration uses to calculate your Social Security retirement benefit is called the Average Indexed Monthly Earnings, or AIME (don’t you just love the acronym-loving Social Security Administration? Errr… SSA.). The AIME is calculated by taking the highest-earning (by index) 35 years of your working life while covered by Social Security, and then computing an average monthly amount based upon those indexed amounts.

Gobbledy-gook, right? Okay, here’s another way to explain it: as you work in a Social Security insured job, your earnings are recorded each year. Each year the SSA applies a multiplier to the year's wages, based upon an index called the Average Wage Index. Each person's index is based on the year they reach age 62. The indexes for each year of your earnings is adjusted, reflecting the change from when your earnings were recorded by comparison to the year you reach age 62...

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