Adjustment of your guaranteed alternative when you become entitled after age 62.
(a) If you do not become entitled to benefits at the time you reach age 62, we adjust the guaranteed alternative computed for you under § 404.232 as described in paragraph (b) of this section.
(b) To the primary insurance amount computed under the guaranteed alternative, we apply any automatic cost-of-living or
ad hoc
increases in primary insurance amounts that go into effect in the year you reach age 62 and in years up through the year you become entitled to benefits. (See appendix VI for a list of the percentage increases in
primary insurance amounts since December 1978.)
Example:
Mr. C reaches age 62 in January 1981 and becomes entitled to old-age insurance benefits in April 1981. He had no social security earnings before 1951 and his year-by-year social security earnings after 1950 are as follows:
Year
Earnings
1951
$3,600
1952
3,600
1953
3,600
1954
3,600
1955
4,200
1956
4,200
1957
4,200
1958
4,200
1959
4,800
1960
4,800
1961
4,800
1962
4,800
1963
4,800
1964
4,800
1965
4,800
1966
6,600
1967
6,600
1968
7,800
1969
7,800
1970
7,800
1971
7,800
1972
9,000
1973
10,800
1974
13,200
1975
14,100
1976
15,300
1977
16,500
1978
17,700
1979
22,900
1980
25,900
1981
29,700
Mr. C's elapsed years are the 30 years 1951 through 1980. We subtract 5 from his 30 elapsed years to find that we must use 25 benefit computation years in computing his average monthly wage. His computation base years are 1951 through 1980 which are years after 1950 up to the year he reached age 62. We will use his 25 computation base years with the highest earnings to compute his average monthly wage. Thus, we exclude the years 1951-1955. The year 1981 is not a base year for this computation.
We total his earnings in his benefit computation years and get $236,000. We then divide by the 300 months in his 25 benefit computation years, and find his average monthly wage to be $786.66 which is rounded down to $786.
The primary insurance amount in the benefit table in appendix III that corresponds to Mr. C's average monthly wage is $521.70. The 9.9 percent and 14.3 percent cost of living increase for 1979 and 1980, respectively, are not applicable because Mr. C reached age 62 in 1981.
The average indexed monthly earnings method described in §§ 404.210 through 404.212 considers all of the earnings after 1950, including 1981 earnings which, in Mr. C's case cannot be used in the guaranteed alternative method. Mr. C's primary insurance amount under the average indexed earnings method is $548.40. Therefore, his benefit is based upon the $548.40 primary insurance amount. As in the guaranteed alternative method, Mr. C is not entitled to the cost of living increases for years before the year he reaches age 62.20 C.F.R. § 404.233
Adjustment of your guaranteed alternative when you become entitled after age 62.
Edition 2025