Terms

Bend Points

Social Security is structured so that lower income workers receive a higher return on their Social Security taxes than higher wage earners. To accomplish this end, the Average Indexed Monthly Earnings amount is broken into up to three parts and each is weighted differently to compute the Primary Insurance Amount. The "bend points" (so called becuase a graph of the resulting benefit has two bends in it) are the dollar amounts that split the first and second level and the amount which spilts the second and thrid level

For 2004, this computation is based on the following rates and bend points:

The graph makes clear the reason that the bend points ($627 and $3779) are so named: