During the calculation of this factor, workers' earnings for prior years, up to the maximum Social Security wage base are adjusted to what they would have been if wage levels in earlier years had been the same as they are now.Identify this factor.
A)Average forecasted monthly earnings
B)Average replacement annual earnings
C)Actual indexed annual cost
D)Average indexed monthly earnings
E)Average extended replacement cost

Question

Quizplus · Accepted Answer

This factor is known as the Average Indexed Monthly Earnings (AIME). It is used in the United States to calculate Social Security benefits. The AIME takes into account up to 35 years of a worker's earnings, adjusting past earnings to account for changes in wage levels over time, so that they are comparable in today's dollars. This adjustment ensures that the calculation of Social Security benefits reflects the rise in living standards that occurred during the worker's career.

During the Calculation of This Factor, Workers' Earnings for Prior