Indexed earnings used to compute initial benefits
When indexing an individual's earnings for benefit computation purposes, we must first determine the year of first eligibility for benefits. For retirement, eligibility is at age 62. If a person reaches age 62 in 2024, for example, then 2024 is the person's year of eligibility. We always index an individual's earnings to the average wage level two years prior to the year of first eligibility. Thus, for a person retiring at age 62 in 2024, we would index the person's earnings to the average wage index for 2022, or 63,795.13. We would multiply earnings in a year before 2022 by the ratio of 63,795.13 to the average wage index for that year; we would take earnings in 2022 or later at face value. (See two examples of indexed earnings.)
Indexed program amounts
In addition, the Pension Benefit Guaranty Corporation uses the national average wage index to compute premium rates for PBGC-insured plans, as required by section 4006 of ERISA.
Determination of the National Average Wage Index for 2022
The complete average wage indexing series is shown below.