SSDI Benefits Calculation Formula
If you are found eligible for SSDI benefits, the dollar amount that you receive monthly is based on the amount that you have paid into the Social Security system. Your average lifetime earnings prior to your disability are the sole factor used to determine your total benefit amount.
The mathematical equation used for disability is essentially the same as the one used to determine your Social Security retirement amount.
The first thing that must be figured in the equation are your ‘covered earnings’. Covered earnings are work-related earnings that are subject to Social Security taxation. Generally, these are most types of wage income and self-employment income (notable exceptions are earnings from certain state and local governments and from railroads).
Average Indexed Monthly Earnings (AIME)
The next step is determining a claimant’s AIME. This is done by indexing that worker’s covered earnings to reflect the change in general wage levels over the worker’s lifetime. Essentially the wages are indexed for inflation.
Depending on the worker’s age, the SSA will determine AIME by examining up to 35 years of earnings. The shorter the claimant’s working life, the fewer number of years need examined.
Then SSA will select the appropriate years that reflect the highest indexed earnings. Those highest earning years are averaged to determine the Average Indexed Monthly Earnings (AIME).
Suppose you have been working since age 21 but suffer from a disabling condition at age 50.
- First the SSA counts up the number of years from age 22 to the date of your disability. In this case, 50-22 = 28 working years.
- It then throws out your lowest earnings years (the number of years thrown out is between 1 and 5 years depending on a claimant’s age) In our example, the 5 lowest earnings years would be thrown out.
- Finally, those wages are indexed and averaged to determine a claimant’s AIME.
Primary Insurance Amount (PIA)
The last step in the process is determining a claimant’s PIA. The “primary insurance amount” (PIA) is the benefit a claimant will receive if approved for SSDI benefits.
The formula detailed below is progressive in nature as it provides higher benefits to lower earners. SSDI recipients receive a benefit equal to 100% of their PIA amount. The average SSDI amount in January of 2022 was $1,359.
PIA will be the sum of:
- 90 percent of the first $1,024 of his/her average indexed monthly earnings, plus
- 32 percent of his/her average indexed monthly earnings over $1,024 and through $6,172, plus
- 15 percent of his/her average indexed monthly earnings over $6,172.
As mentioned, SSDI recipients receive 100% of their PIA, but PIA is adjusted up or down for retirees who retire at an age other than their You are eligible for reduced retirement benefits from age 62 until full retirement age at 67. More.
2022 Social Security Disability Calculator
Quickly calculate your potential monthly SSD payments. Keep in mind this is a rough estimate that assumes you became disabled in 2022. Many factors such as date of disability and use of other public disability benefits such as worker’s comp can affect potential earnings.
Take the Assessment
To find out if you meet the criteria for a free social security disability benefits, take the assessment.