Indexing Yearly Income
Earnings in all years prior to two years before the current year are indexed for inflation. This is done by multiplying the amount credited to the Social Security earnings record in any given year by an indexing factor. The indexing factor is the ratio of the Wage Index two years before the current year to the Wage Index during the earnings year.
The following table shows the Wage Index in effect during each year:
| Year | Wage Index | Year | Wage Index | Year | Wage Index |
|---|---|---|---|---|---|
| 1951 | $2,799.16 | 1971 | $6,497.08 | 1991 | $21,811.60 |
| 1952 | $2,973.32 | 1972 | $7,133.80 | 1992 | $22,935.42 |
| 1953 | $3,139.44 | 1973 | $7,580.16 | 1993 | $23,132.67 |
| 1954 | $3,155.64 | 1974 | $8,030.76 | 1994 | $23,753.53 |
| 1955 | $3,301.44 | 1975 | $8,630.92 | 1995 | $24,705.66 |
| 1956 | $3,532.36 | 1976 | $9,226.48 | 1996 | $25,913.90 |
| 1957 | $3,641.72 | 1977 | $9,779.44 | 1997 | $27,426.00 |
| 1958 | $3,673.80 | 1978 | $10,556.03 | 1998 | $28,861.44 |
| 1959 | $3,855.80 | 1979 | $11,479.46 | 1999 | $30,469.84 |
| 1960 | $4,007.12 | 1980 | $12,513.46 | 2000 | $32,154.82 |
| 1961 | $4,086.76 | 1981 | $13,773.10 | 2001 | $32,921.92 |
| 1962 | $4,291.40 | 1982 | $14,531.34 | 2002 | $33,252.09 |
| 1963 | $4,396.64 | 1983 | $15,239.24 | 2003 | $34,064.95 |
| 1964 | $4,576.32 | 1984 | $16,135.07 | 2004 | $35,648.55 |
| 1965 | $4,658.72 | 1985 | $16,822.51 | 2005 | $36,952.94 |
| 1966 | $4,938.36 | 1986 | $17,321.82 | 2006 | $38,651.41 |
| 1967 | $5,213.44 | 1987 | $18,426.51 | 2007 | $40,405.48 |
| 1968 | $5,571.76 | 1988 | $19,334.04 | 2008 | $41,334.97 |
| 1969 | $5,893.76 | 1989 | $20,099.55 | 2009 | $40,711.61 |
| 1970 | $6,186.24 | 1990 | $21,027.98 | 2010 | $41,673.83 |
Thus the factor used in 2009 to index 1951 wages is 14.435 = $40,405.48 / $2,799.16, i.e. the ratio of the 2007 Wage Index (two years before 2009) to the 1951 Wage Index.
Read more about this topic: Average Indexed Monthly Earnings
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