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  • Writer's pictureChris Stein, CFP®

Social Security Acronyms and Abbreviations

Acronyms and abbreviations are popular with governmental agencies, but they can sure make things confusing for the rest of us! This week we will identify the most common Social Security acronyms and abbreviations.  Since we talk about most of these in our blog posts and sometimes it is hard to keep them straight, this list should help!


Average Indexed Monthly Earnings.  This is the result of adding your 35 highest annual earnings after they are adjusted for wage inflation, then dividing by 420 to get an average monthly earnings based on your actual work history, but in current dollars.


Adjusted Reduction Factor.  If you claimed your benefits prior to your full retirement age and had those benefits reduced due to work or other factors, the amount of your reduction is reduced once you reach full retirement age, which generally results in a higher monthly benefit.


Cost of Living Adjustment.  The percentage increase to next year’s benefits as a result of inflation as measured by the CPI (Consumer Price Index).


Computation Years.  The years actually used in the calculation of your AIME (see above).


Delayed Retirement Credit.  The increase to your benefit if you suspend or delay claiming your benefit, after your Full Retirement Age.  Currently benefits are increased by 8% per year for each year suspended or delayed after Full Retirement Age up to age 70.


Family Maximum.  The maximum benefits allowed to be claimed on a single work record are limited by family.  Your FMAX represents the maximum benefit your family can receive under most circumstances.


Full Retirement Age.  The age at which you receive your PIA as a retirement benefit.  If you claim prior to your FRA your benefits are reduced.  If you claim after your FRA you receive benefit of DRCs as described above.  Your FRA varies by birth year, but for those not yet 66 will be some age between 66 and 67.


Government Pension Offset.  The reduction to your spousal or survivor benefits if you receive a pension from a government job that did not participate in the Social Security system.  The reduction to your SS Spousal or Survivor benefits is equal to two thirds of your government pension amount.


Number Holder.  The very sterile term describing the person holding the Social Security number on who’s record benefits are being claimed.  Each one of us in the “system” are technically called “number holders”


Primary Insurance Amount.  The monthly retirement benefit at FRA.  This is based on the AIME, which came from the best 35 computational years of earnings.


Windfall Elimination Provision.  Reduces your retirement benefit if you receive a government pension from a job that did not participate in the Social Security system.  The reduction is avoided if you have at least 30 years of substantial participation in the Social Security system from other work.

This list represents the most common acronyms used when discussing Social Security issues on our blog.  Hopefully this list helps you follow along a little easier.

To listen to our audio post on this topic, please use the play button below.

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