Posted in Business Practice

Your Social Security Benefit: How It’s Figured

Why is FCCAM posting on this topic? Many providers take the maximum amount of deductions they can each year. That means your net income is significantly less than gross, so ultimately your Social Security benefits will also probably be less than you were expecting.

It’s important to understand how social security benefits are figured.

  • Benefits are figured off your lifetime earning – the net income you pay yearly taxes on, NOT your gross income.
  • Adjust or “index” your actual earnings to account for changes in average wages since the year the earnings were received.
  • Calculate your average indexed monthly earnings during the 35 years in which you earned the most.
  • Apply a formula to these earnings and arrive at your basic benefit, or “primary insurance amount.”

How do you find out about your status for Social Security benefits?

Set up a personal “my Social Security” account. This site gives you access to: an estimate of your personal retirement benefits; see the effects of different retirement age scenarios; an online Social Security Statement (Statement).

Review your earnings history to make sure everything is accurate. This is important, because your benefit amount is based on how much you’ve earned over your lifetime. If that information is wrong, you may not get the full amount you’re entitled to.

Important Things to Know about Your Social Security Benefits

  • Social Security benefits are not intended to be your only source of retirement income. You may need other savings, investments, pensions, or retirement accounts to make sure you have enough money when you retire.
  • You need 40 credits of work (at least 10 years) to qualify for retirement benefits. The amount of your benefit is based on your highest 35 years of earnings. If you have fewer than 35 years of earnings, years without work count as 0 and may reduce your benefit amount.
  • To keep up with inflation, benefits are adjusted through “cost of living adjustments.”
  • If you get retirement or disability benefits, your spouse and children also may qualify for benefits.
  • If you and your spouse both work, use the my Social Security Retirement Calculator to estimate spousal benefits.
  • If you are divorced and were married for 10 years, you may be able to claim benefits on your ex-spouse’s record. If your ex-spouse receives benefits on your record, that does not affect your or your current spouse’s benefit amounts.
  • Learn more about benefits for you and your family


FCCAM works to unify, promote and strengthen quality professional family child care in Maine. We understand the critical role of child care providers in the lives of children and families. Through collaboration with other organizations we work to increase awareness of our profession and the value of a strong child care system to Maine's diverse communities.