What’s My Social Security Disability Benefit Amount?

What’s My Social Security Disability Benefit Amount?

How much will you receive every month as your Social Security Disability (SSD or SSDI) benefit payment? That is often the first and most pressing question people want to be answered when they begin the process of applying for SSD benefits.

The Clauson Law Firm is dedicated to keeping all our clients fully informed about every aspect of their SSD claim. That includes explaining how the amount of your monthly SSD benefit payment is determined. If you have any questions about SSD benefits or SSI benefits, contact Clauson Law immediately for a free review of your case and to get all the answers you need.

As we explain in this blog post, the number of years an SSD claimant worked and their average earnings over those years will determine the amount of their SSD monthly benefit amount.

What Is Your Social Security Disability Benefit Amount Based On?

The Social Security Disability Insurance (SSD or SSDI) program was created to provide support to workers and former workers who suffered a disabling injury or illness that prevents them from working enough to earn a living. The emphasis on “working” to qualify for SSD benefits comes from the fact that workers pay into the Social Security Trust Fund from which the benefits are paid.

SSD benefits are limited only to those people who worked long enough and recently enough to have earned the required number of “work credits.” In 2022, a worker earns one work credit for every $1,510 in income. The number of work credits required to qualify for SSD benefits varies based on the age of the worker when they become disabled. Generally, 40 work credits are needed to qualify for SSD, but someone who becomes disabled at a young age won’t have worked for the ten years it takes to earn 40 credits. Instead, a worker between the age of 24 and 31 needs to have worked at least half the years since they were 21.

For example, if a worker becomes disabled at age 27, they only need to have worked for 3 years (half the years since age 21), which would mean they earned 12 credits.

How SSD Uses Your Lifetime Average (Indexed) Monthly Earnings? (AIME)

The purpose of SSD benefits is to serve as a partial replacement for the wages a worker is unable to earn because of their disability. Replacing the earnings for each disabled worker in proportion to their typical income requires the Social Security Administration (SSA) to look for the 35 highest income earning years you had during your working life.

Only taxable income reported to the IRS is used in the benefit determination formula. Unreported income and income you claimed as tax-exempt will not be counted.

Indexing: The highest 35 yearly incomes you earned are first “indexed,” a process the SSA uses to adjust each year’s income so it remains proportionate to that year’s national average annual income. This “indexing” exercise ensures that the increased cost of living over those 35 years is accounted for. A dollar you earned in 1980 doesn’t equal its value to a consumer in 2022.

Averaging Your Monthly Income: Your 35 highest yearly indexed annual incomes are selected and then added together, divided by 35, then divided by 12. The result is the Average Indexed Monthly Income (AIME).

The SSA takes your Average Indexed Monthly Income (AIME), which is obtained when they averaged 35 years of your income and plugged it into a formula the government uses to determine everyone’s SSD benefit amount. This formula produces a different result for everyone because every worker’s AIME is unique.

Here Is the Formula Used to Determine your Monthly Social Security Disability Amount

First, your Average Indexed Monthly Income (AIME) is determined in the manner we outlined above. Next, that figure representing the average amount you earned each month over your lifetime, indexed for today’s dollars, is fed into the following equation to produce your Primary Insurance Amount (PIA). Your PIA is the amount of your monthly benefit within a few cents: PIA =

• 90% of the first $1,024 of your AIME, plus
• 32% of the amount of your AIME between $1,024 and $6,072, plus
• 15% of the amount of your AIME over $6,072

Rounding Down to Next Whole Dollar

The Primary Insurance Amount (PIA) figure produced by the equation just illustrated is almost your final monthly SSD benefit amount. The last step in the process is to round down that PIA amount to the next lowest whole dollar. That final figure is your SSD Benefit Amount.

To get a genuine idea of how the formula works, let’s put a couple of sample incomes through the equation to understand how the first dollars earned are weighted more heavily than those earned in the higher income brackets.

Example #1 (Alan – Average Indexed Monthly Income (AIME) of $4,166.32
In this example, Betsy — has a higher monthly income to see how the formula works with larger salaries.

• 90% of the first $1,024 of $4,166.32=1024 x 0.90 = $921.60 plus
• 32% of Alan’s AIME between $1,024 and $6,072 = 4166.32 – 1024 = $3,142.32 x 0.32 = $1,005.54, Plus
• 15% of Alan’s AIME over $6,072 = 0
• Add $912.60 + $1,005.54+$0 = $1,927.14 (PIA)
• Round Down to Next Whole Dollar = $1,927 = Alan’s Final Monthly SSD Benefit Amount

Example # 2 (Betsy — Average Indexed Monthly Income (AIME) of $6,750.25)
In this example, Betsy — has a higher monthly income to see how the formula works with larger salaries.

• 90% of the first $1,024 of $6,750.25 = $921.60, plus
• 32% of Betsy’s AIME between $1,024 and $6,072 = 6072 – 1024 = $5,048 x .32 = $1,656.36, plus
• 15% of Betsy’s AIME over $6,072 = 6,750.25 – 6,072 = $101.74
• Add $921.60 + $1,656.36 + $101.74 = $2,679.70
• Round Down to Next Whole Dollar – $2,679 = Betsy’s Final Monthly SSD Benefit Amount

Social Security Disability Benefit Is Identical to Social Security Retirement

Many people are surprised to learn that their Social Security Disability benefit amount is exactly the same as their full Social Security Retirement benefit will be if they wait until their full retirement age to file for their Social Security retirement benefits.

Why are both your SSD and your Social Security Retirement the same amount? The Social Security Administration’s benefit programs were designed by Congress, and the regulators who administer the programs, to serve particular purposes.

The Social Security Disability program is only open to workers who suffer long-term or permanent disabilities. The SSDI program is not intended to provide financial support to people with temporary disabilities. The very definition of an SSD qualified disability requires that the disability “lasts or is expected to last at least 12 months or result in the death of the applicant.”

Although the SSA hopes everyone recovers and resumes substantial gainful activities, the government knows that most SSD recipients are unlikely to return to full-time employment. For those people, their disability has forced them into early retirement.

Should You Claim Early Retirement Instead of Social Security Disability?

If you are considering filing a claim for Social Security Retirement benefits early because you are too ill or injured to continue working, DO NOT FILE for early retirement until you speak with an experienced Social Security Disability lawyer who specializes in counseling people in your circumstances.

Early retirement, that is filing for Soc. Sec. retirement benefits at age 62 or before your full retirement age, will permanently reduce your Soc. Sec. retirement benefits by up to a full 30%.

The government’s financial projections for the SSD program’s continued solvency do not anticipate paying out retirement benefits earlier than they are scheduled.

But, if you have a medically determinable physical or mental impairment that prevents you from performing a substantial gainful activity, and that impairment has or is expected to last for 12 months or longer, your condition probably qualifies you to receive Social Security Disability benefits equal to 100 percent of your Soc. Sec. retirement benefit.

Contact one of our many locations in North Carolina and let one of Clauson Law’s disability law experts answer your questions and advise you about your rights to SSDI benefits.

Filing for Social Security Disability After You Take Early Retirement

If you file for your Social Security retirement benefits at age 62 or at any time before you reached full retirement age, and later suffer a disabling injury or illness, you may be able to switch from your retirement benefits over to higher SSD benefits.

Remember, early retirement means permanently reduced benefits. But switching to SSD benefits based on a qualifying injury or illness entitles you to your full retirement benefit amount. Unfortunately, when you reach your full retirement age, the SSD benefits claim will be transferred back to Soc. Sec. retirement benefits at your earlier, reduced benefit amount.

Contact Clauson Law for All the Information You Need – Free Case Review Always

The Clauson Law Firm has extensive experience representing SSD and SSI claimants from North Carolina and from around the United States.

Our entire team of disability law attorneys and trained SSDI and SSI advocates is devoted to getting you the highest monthly benefits your circumstances entitle you to. Don’t settle for anything less than the best legal representation. You and your family are our top priority. Let us fight for your benefits.