It's the same as why you wouldn't measure your weight in ounces, but neither would you weigh something very light in pounds - you want a convenient number which is easy to interpret. PC is short for parsec and it's a unit of measurement equal to 3,000,000,000,000,000,000 cm!
Take your annual covered earnings (the earnings on which you pay Social Security payroll taxes), multiply it by that year's index factor and you will obtain your indexed wage for each year you have worked. Next, add up all these indexed wages and divide them by 35 to determine your average wage.
Three steps to calculate social security benefits. 1  First, a workerâs previous earnings are restated in terms of todayâs wages to reflect wage growth.2  Second, earnings for the highest 35 years are averaged and divided by the number of months in 35 years to arrive at Average Indexed Monthly Earnings (AIME). Second, earnings for the highest 35 years are averaged and divided by the number of months in 35 years to arrive at Average Indexed Monthly Earnings (AIME).