Key Social Security Terms

Average Indexed Monthly Earnings (AIME): A calculation of your average earnings over your highest 35 years, adjusted for inflation, used to determine PIA.

Cost-of-Living Adjustment (COLA): An annual increase in benefits to offset inflation, based on the Consumer Price Index.

Delayed Retirement Credits: Increased benefits for delaying Social Security past FRA, up to age 70, boosting payments by up to 8% per year.

Disability Insurance Benefits (DIB): Monthly payments for individuals unable to work due to a qualifying disability.

Divorced Spouse Benefits: Benefits for an ex-spouse, if married at least 10 years, based on the worker’s record, without affecting the worker’s benefits.

Early Retirement: Claiming Social Security benefits before FRA (as early as 62), resulting in permanently reduced monthly payments.

Earnings Test: A rule reducing benefits for those under FRA who earn above a certain income limit, with withheld amounts later restored.

FICA (Federal Insurance Contributions Act): The payroll tax deducted from wages to fund Social Security and Medicare.

^^Full Retirement Age (FRA): The age at which you qualify for full, unreduced Social Security benefits, typically 66–67, depending on birth year.

Government Pension Offset (GPO): A reduction in spousal or survivor benefits for those receiving a pension from non-Social Security-covered government work.

Medicare: A federal health insurance program, partially funded by FICA taxes, for those 65+ or with certain disabilities.

OASDI (Old-Age, Survivors, and Disability Insurance): The formal name for the Social Security program, covering retirement, survivor, and disability benefits.

Primary Insurance Amount (PIA): The benefit amount you’re entitled to at FRA, based on your earnings history.

Social Security: A federal program providing retirement, disability, and survivor benefits, funded primarily through payroll taxes.

Spousal Benefits: Benefits paid to a spouse (or ex-spouse) based on a worker’s record, up to 50% of the worker’s PIA at FRA.

Survivor Benefits: Payments to a deceased worker’s spouse, children, or dependents, based on the worker’s earnings record.

Trust Fund: The federal account holding Social Security contributions, used to pay benefits and administrative costs.

Windfall Elimination Provision (WEP): A reduction in benefits for workers with pensions from non-Social Security-covered jobs, affecting those with fewer than 30 years of substantial Social Security-covered earnings.
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