What Does Average Indexed Monthly Earnings Mean?
The average indexed monthly earnings (AIME) is a calculation used to determine social security benefits, including disability.
A person’s AIME are calculated by first adding together the amounts they earned in their top thirty-five years for earnings. The resulting figure is then divided by 35 to get an average yearly income, which is, in turn, further divided by twelve to get the average indexed monthly earnings.
Insuranceopedia Explains Average Indexed Monthly Earnings
In general, the more a person has earned, the higher their disability benefits will be. This is very significant for disability insurance because it pays out a benefit to replace the policyholder’s income when they have become disabled.