Can you please explain AIME? I don't quite understand.

**AIME (Average Indexed Monthly Earnings) Explained** 1. **Purpose**: AIME is a measure used to determine an individual's Social Security benefits. It represents the average of a person's monthly earnings, indexed to account for wage growth over time. 2. **Calculation**: AIME considers an individual's top 35 years of earnings and calculates the average monthly earnings after indexing them to current wage levels. This average is then used to calculate the Primary Insurance Amount (PIA), which is the basis for an individual's Social Security benefits. 3. **Application**: AIME is utilized to determine the PIA, which is used to calculate Social Security benefits. It is an essential component in assessing an individual's eligibility and benefit amount based on their lifetime earnings. 4. **Significance**: AIME provides a standardized measure of an individual's earnings history, allowing for a more equitable distribution of Social Security benefits based on the actual income levels and wage growth experienced over a person's career. In conclusion, AIME is a crucial concept in understanding how Social Security benefits are calculated. It offers a fair assessment of an individual's earnings potential over their working years, ensuring that those who have earned more are awarded higher benefits, while those with lower earnings receive less.