How to calculate your social security disability benefits

Q: How is Social Security disability benefits calculated?

Social Security benefits are typically computed using average indexed monthly earnings. This average summarizes up to 35 years of a workers indexed earnings. We apply a formula to this average to compute the primary insurance amount (PIA). The PIA is the basis for the benefits that are paid to an individual.

When you apply for Social Security Disability Insurance (SSDI), one of your top concerns most likely is how much your monthly payment will be if you are eligible for benefits. You need this information so you can be certain that you have sufficient income to survive. However, how your monthly payment is determined is complicated.

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How Your SSDI Payments Are Calculated
Other Income That May Reduce Your SSDI Payment
Can You Receive Retroactive Payments?
Your disability payment is based on your average lifetime earnings before you became disabled. How severe your disability is does not factor in, although payments from other sources can.
How the SSA Calculates Your SSDI Benefit
Covered Earnings: Your Past Income
Estimating Your SSDI Benefit Amount
How Other Disability Payments Can Affect Your SSDI
Which Disability Benefits Can Affect Your SSDI?
How Much in Total Disability Benefits Does the SSA Allow?
Protect Your Disability Benefits
How is Social Security disability benefits calculated?
How do they determine how much disability you get?

How Your SSDI Payments Are Calculated

The severity of your disability will not affect the amount of SSDI benefits you receive. The Social Security Administration (SSA) will determine your payment based on your lifetime average earnings before you became disabled. Your benefit amount will be calculated using your covered earnings. These are your earnings at jobs where your employer took money out of your wages for Social Security or FICA.

Your SSDI monthly benefit will be based on your average covered earnings over a period of time, which is referred to as your average indexed monthly earnings (AIME). The SSA uses these amounts in a formula to determine your primary insurance amount (PIA). This is the basic amount used to establish your benefit.

SSDI payments range on average between $800 and $1,800 per month. The maximum benefit you could receive in 2020 is $3,011 per month. The SSA has an online benefits calculator that you can use to obtain an estimate of your monthly benefits.

Other Income That May Reduce Your SSDI Payment

If you receive other government benefits, your monthly SSDI benefit could be reduced. Sources of income that could affect your payment include:

Worker’s compensation
Public disability benefits
Pension based on work not covered by Social Security, such as a government or foreign government pension

Can You Receive Retroactive Payments?

Once the SSA approves your SSDI application and calculates your monthly benefit, you may be entitled to a back pay award. How many months of payments you will receive will depend on the date you applied for benefits and your disability onset date.

If you are applying for SSDI benefits, you need the assistance of a skilled Social Security disability lawyer to get your application approved and receive the benefits you deserve. To schedule a free consultation with a member of our legal team, fill out the online form on this page or call our Roswell office today.

Your disability payment is based on your average lifetime earnings before you became disabled. How severe your disability is does not factor in, although payments from other sources can.

Social Security disability insurance (SSDI) is designed to help workers who can no longer work because of a disability. Unlike Supplemental Security Income (SSI), which also pays disability benefits but is based on limited income and resources, SSDI requires that you have worked and paid Social Security taxes (FICA) for a certain time.

The average SSDI payment is currently $1,358. The highest monthly payment you can receive from SSDI is $3,345 (the same maximum for retirement benefits). This article covers how your monthly SSDI benefit is calculated.

How the SSA Calculates Your SSDI Benefit

If you're eligible for SSDI benefits, the amount you receive each month will be based on your average lifetime earnings from before your disability began. This is the only factor that determines your benefit amount, although it may be reduced if you receive disability payments from other sources (see below).

In other words, your SSDI benefit amount isn't based on how severe your disability is. And unlike SSI, the Social Security Administration (SSA) won't deny your SSDI claim because you have too much "unearned income" (such as gifts) or too many resources (assets).

Covered Earnings: Your Past Income

Your past earnings must be covered under the Social Security program to count towards the SSDI benefits you'll receive. "Covered earnings" are wages you've received from jobs that paid into Social Security.

If you've received a paycheck that had money withheld for "Social Security taxes" or "FICA," the wages you made at that job are covered earnings and will count toward calculating your benefit amount. Most wages and salaries are covered earnings.

If you've worked for yourself and paid self-employment taxes to the IRS for business income or freelance income, those taxes count just like FICA taxes.

Estimating Your SSDI Benefit Amount

Your SSDI payment will be based on your average covered earnings over a period of years. The SSA calls this your "average indexed monthly earnings" (AIME). A formula is then applied to your AIME to calculate your primary insurance amount (PIA)—the base figure the SSA uses in setting your actual benefit amount.

For example, someone in their fifties whose income averaged $100,000 for the past few years might expect a disability payment of $2,500 per month. Someone in their fifties who made $60,000 per year might expect a disability payment of $2,000 per month.

You can check your annual Social Security Statement to see your covered earnings history. You'll need to set up an account to see your statement online at my Social Security. You can also use the SSA's benefits calculator to estimate the amount of your disability benefits. Or, call your local Social Security office, and they can help you estimate what your benefits would be.

How Other Disability Payments Can Affect Your SSDI

If you receive disability benefits from a private source, like a private pension or private insurance, these benefits won't affect your SSDI benefits. But your private long-term disability (LTD) benefit will likely be reduced by the LTD insurance company once you start collecting Social Security disability. How much you receive in SSDI benefits could change if you're also getting certain other public disability benefits.

Which Disability Benefits Can Affect Your SSDI?

If you were injured on the job and you're receiving workers' compensation benefits, the SSA might reduce the amount of your SSDI benefit. That's because the SSA has set a limit on how much public disability income you can have. And worker's comp isn't the only public benefit that can affect the amount of your SSDI.

Other disability benefits that aren't job-related and are paid for by the federal, state, or local government might also reduce your SSDI benefit amount. Examples of these include:

temporary disability benefits paid by the state
military disability benefits, and
state or local government retirement benefits that are based on disability.

But some public benefits aren't counted toward the disability benefits limit, including SSI and VA benefits.

How Much in Total Disability Benefits Does the SSA Allow?

The amount you receive from SSDI and all other public disability benefits combined (including workers' comp) can't be more than 80% of your average pre-disability earnings. If it's more than that, in most states, the excess amount will be trimmed from your SSDI benefits. (In some states, the excess amount is deducted from your other public disability benefits rather than from your SSDI benefit.)

Protect Your Disability Benefits

Getting workers' compensation (or other public disability benefits) could reduce the amount of your SSDI benefit. How Social Security disability meshes with other public programs can be complicated and varies depending on where you live. If you qualify for more than one public disability program, you might want to speak with an attorney to make sure you don't miss out on any disability benefits you are entitled to.

Social Security benefits are typically computed using "average indexed monthly earnings." This average summarizes up to 35 years of a worker's indexed earnings. We apply a formula to this average to compute the primary insurance amount (PIA). The PIA is the basis for the benefits that are paid to an individual.

How do they determine how much disability you get?

The Social Security Administration (SSA) will determine your payment based on your lifetime average earnings before you became disabled. Your benefit amount will be calculated using your covered earnings. These are your earnings at jobs where your employer took money out of your wages for Social Security or FICA.