Part 2/8:
To understand the financial divergence between Pat and Nancy, it's important to grasp the mechanics of how Social Security works. Primarily, Social Security benefits are calculated from two core elements: career earnings and the age at which you choose to claim your benefits. The Social Security Administration uses your highest 35 years of earnings adjusted for inflation to compute an amount known as the Primary Insurance Amount (PIA). This monthly benefit is available at full retirement age (FRA), commonly around 67 years old for today’s retirees.
Emphasizing the Decision Point
The point of contention arises when considering when to claim Social Security: