20 CFR 404.221 - Computing your average monthly wage.

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§ 404.221 Computing your average monthly wage.
(a) General. Under the average-monthly-wage method, your social security earnings are averaged over the length of time you can reasonably have been expected to have worked under social security after 1950 (or after you reached age 21, if later).
(b) Which of your earnings may be used in computing your average monthly wage.
(1) In computing your average monthly wage, we consider all the wages, compensation, self-employment income, and deemed military wage credits that are creditable to you for social security purposes. (The maximum amounts creditable are explained in §§ 404.1047 and 404.1096 of this part.)
(2) We use your earnings in your computation base years in computing your average monthly wage. All years after 1950 up to (but not including) the year you become entitled to old-age or disability insurance benefits, or through the year you die if you had not been entitled to old-age or disability benefits, are computation base years for you. Years after the year you die may not be used as computation base years even if you have earnings credited to you in them. However, years beginning with the year you become entitled to benefits may be used for benefits beginning with the following year if using them would give you a higher primary insurance amount. Years wholly within a period of disability are not computation base years unless your primary insurance amount would be higher if they were. In such situations, we count all the years during the period of disability, even if you had no earnings in some of them.
(c) Number of years to be considered in computing your average monthly wage. To find the number of years to be used in computing your average monthly wage—
(1) We count the years beginning with 1951 or (if later) the year you reached age 22 and ending with the year before you reached age 62, or became disabled, or died before age 62. Any part of a year—or years—in which you were disabled, as defined in § 404.1505, is not counted unless doing so would give you a higher average monthly wage. In that case, we count all the years during the period of disability, even if you had no earnings in some of those years. These are your elapsed years. (If you are a male and you reached age 62 before 1975, see paragraph (c)(2) of this section for the rules on finding your elapsed years.)
(2) If you are a male and you reached age 62 in—
(i) 1972 or earlier, we count the years beginning with 1951 and ending with the year before you reached age 65, or became disabled or died before age 65 to find your elapsed years;
(ii) 1973, we count the years beginning with 1951 and ending with the year before you reached age 64, or became disabled or died before age 64 to find your elapsed years; or
(iii) 1974, we count the years beginning with 1951 and ending with the year before you reached age 63, became disabled, or died before age 63 to find your elapsed years.
(3) Then we subtract 5 from the number of your elapsed years. This is the number of your benefit computation years; we use the same number of your computation base years in computing your average monthly wage. For benefit computation years, we use the years with the highest amounts of earnings, but they may include years of no earnings. You cannot have fewer than 2 benefit computation years.
(d) Your average monthly wage. After we find your benefit computation years, we compute your average monthly wage by—
(1) Totalling your creditable earnings in your benefit computation years;
(2) Dividing the total by the number of months in your benefit computation years; and
(3) Rounding the quotient to the next lower whole dollar if not already a multiple of $1.
Example:
Mr. B reaches age 62 and becomes entitled to old-age insurance benefits in August 1978. He had no social security earnings before 1951 and his year-by-year social security earnings after 1950 are as follows:
Year Earnings
1951 $2,700
1952 2,700
1953 3,400
1954 3,100
1955 4,000
1956 4,100
1957 4,000
1958 4,200
1959 4,800
1960 4,800
1961 4,800
1962 4,800
1963 4,800
1964 1,500
1965 0
1966 0
1967 0
1968 3,100
1969 5,200
1970 7,100
1971 7,800
1972 8,600
1973 8,900
1974 9,700
1975 10,100
1976 10,800
1977 11,900
We first find Mr. B's elapsed years, which are the 27 years 1951-1977. We subtract 5 from his 27 elapsed years to find that we must use 22 benefit computation years in computing his average monthly wage. His computation base years are 1951-1977, which are the years after 1950 and prior to the year he became entitled. This means that we will use his 22 computation base years with the highest earnings to compute his average monthly wage. Thus, we exclude the years 1964-1967 and 1951.
We total his earnings in his benefit computation years and get $132,700. We then divide that amount by the 264 months in his 22 benefit computation years and find his average monthly wage to be $502.65, which is rounded down to $502.
(e) “Deemed” average monthly wage for certain deceased veterans of World War II. Certain deceased veterans of World War II are “deemed” to have an average monthly wage of $160 (see §§ 404.1340 through 404.1343 of this part) unless their actual average monthly wage, as found in the method described in paragraphs (a) through (d) of this section is higher.

Title 20 published on 2012-04-01

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  • 2014-11-13; vol. 79 # 219 - Thursday, November 13, 2014
    1. 79 FR 67349 - Revised Medical Criteria for Evaluating Genitourinary Disorders; Correction
      GPO FDSys XML | Text
      SOCIAL SECURITY ADMINISTRATION
      Final rule; correction.
      Effective December 9, 2014.
      20 CFR Part 404

This is a list of United States Code sections, Statutes at Large, Public Laws, and Presidential Documents, which provide rulemaking authority for this CFR Part.

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United States Code
U.S. Code: Title 31 - MONEY AND FINANCE
U.S. Code: Title 42 - THE PUBLIC HEALTH AND WELFARE

§ 401 - Trust Funds

§ 402 - Old-age and survivors insurance benefit payments

§ 403 - Reduction of insurance benefits

§ 404 - Overpayments and underpayments

§ 405 - Evidence, procedure, and certification for payments

§ 405 note - Evidence, procedure, and certification for payments

§ 406 - Representation of claimants before Commissioner

§ 409 - “Wages” defined

§ 410 - Definitions relating to employment

§ 410a - Transferred

§ 411 - Definitions relating to self-employment

§ 412 - Self-employment income credited to calendar years

§ 413 - Quarter and quarter of coverage

§ 414 - Insured status for purposes of old-age and survivors insurance benefits

§ 415 - Computation of primary insurance amount

§ 416 - Additional definitions

§ 417 - Benefits for veterans

§ 418 - Voluntary agreements for coverage of State and local employees

§ 418 note - Voluntary agreements for coverage of State and local employees

§ 421 - Disability determinations

§ 421 note - Disability determinations

§ 422 - Rehabilitation services

§ 423 - Disability insurance benefit payments

§ 424a - Reduction of disability benefits

§ 425 - Additional rules relating to benefits based on disability

§ 428 - Benefits at age 72 for certain uninsured individuals

§ 429 - Benefits in case of members of uniformed services

§ 430 - Adjustment of contribution and benefit base

§ 431 - Benefits for certain individuals interned by United States during World War II

§ 433 - International agreements

§ 902 - Commissioner; Deputy Commissioner; other officers

§ 902 note - Commissioner; Deputy Commissioner; other officers

§ 909 - Delivery of benefit checks

42 U.S. Code § 905, 905a - Transferred

42 U.S. Code § 1320a–8a - Administrative procedure for imposing penalties for false or misleading statements

42 U.S. Code § 905, 905a - Transferred

42 U.S. Code § 905, 905a - Transferred

U.S. Code: Title 48 - TERRITORIES AND INSULAR POSSESSIONS
Statutes at Large

Title 20 published on 2012-04-01

The following are ALL rules, proposed rules, and notices (chronologically) published in the Federal Register relating to 20 CFR 404 after this date.

  • 2014-11-13; vol. 79 # 219 - Thursday, November 13, 2014
    1. 79 FR 67349 - Revised Medical Criteria for Evaluating Genitourinary Disorders; Correction
      GPO FDSys XML | Text
      SOCIAL SECURITY ADMINISTRATION
      Final rule; correction.
      Effective December 9, 2014.
      20 CFR Part 404