How Are Benefits for Disability (SSDI) Calculated?

Social Security Disability Insurance (SSDI) is a federal public assistance program that seeks to support people with disabilities. When applying for SSDI, many people want to know upfront how much they will be eligible to receive in benefits each month. An individual on a fixed income who can’t work because of a disability needs this information to ensure they will have sufficient income.

Determining the amount is complex and depends on your unique work experience and contributions to Social Security or FICA during your employment. The severity of a disability is not a consideration when calculating the amount of Social Security disability benefits.

How Can I Get a Basic Idea Regarding Benefits for Disability?

The Social Security Administration (SSA) offers an online Benefits Calculator. This is one of the best tools to use when planning for the future and understanding your financial benefits amounts.

You can begin by starting a mySocial Security account. Creating this account is secure, free, and provides personalized tools to estimate future benefits. You can also use it to manage those benefits you already receive.

Once you've established this account, you can access your official earnings records in the SSA database. You can opt to answer a series of questions to prove your identity rather than creating a personal account. However, the process is more direct when you create an individual Social Security online account.

You’ll find a general calculator for disability and survivor benefits. For a more precise estimate, there is a more detailed version available to install on your computer.

The Formal Process

The SSA uses your official earnings records to determine your SSDI benefits amount. It bases the calculation on your lifetime average covered earnings before you became disabled. In this case, “covered” means the earnings at your jobs where your employer deducted money from your wages to pay into Social Security or FICA on your W2 statement and tax filings.

Suppose you are self-employed using Form 1040 or an independent contractor with Form 1099 earnings. Presumably, you will have paid into the system through self-employment taxes (whether you are the owner, employer, or contract employee) on your net profit. That income will determine the SSDI benefit amount.

Essentially, the SSA will use your 1040 and 1099 income, like your W2 earnings, in SSDI calculations, as long as you paid your taxes. If you have paid into the system, the SSA considers you an insured worker.

Earnings are indexed by computing an insured worker’s benefit, an SSDI eligibility requirement. Your SSDI calculation for monthly benefits uses these average covered earnings over time. The SSA formulary then uses these amounts to determine your primary insurance amount (PIA). This PIA is the benefit amount (before rounding down to the next lower whole dollar) a person receives at normal retirement age.

Note that there are PIA formula bend points. These are the respective percentages of portions of averaged indexed monthly earnings contingent on the year a worker turns 62, becomes disabled before 62, or dies before 62.

You may want to seek assistance in making sense of these formulas. A special needs planning lawyer can help you understand how the SSA calculates SSDI benefits. They can explain the complex rules and formulations used to determine the dollar amount of your benefits.

What Is the Average Payment?

In 2024, the SSA 3.2 percent cost-of-living increase bumped the average monthly SSDI benefit by about $48. This means the average monthly benefit increased from $1,489 to $1,537, helping to offset inflation to some extent. The SSA online benefits calculator, available through your mySocialSecurity account, will help you personalize your benefit amount using your official earnings records.

Suppose you are one of the 2 million family members receiving SSDI via the earnings record of a disabled spouse, former spouse, or parent. In that case, your average monthly benefit will also increase because of the 3.2 percent cost-of-living adjustment. With the SSA benefits calculator, you can plug the numbers in to get an idea of the uptick in your SSDI benefits.

What Will Reduce My Social Security Disability Insurance Benefit?

If you currently receive other government benefits, this may reduce your SSDI benefit amount. Certain sources of income can affect your payment, including:

• Public disability benefits
• Worker’s compensation
• A pension via employment not covered by Social Security, like a government or foreign government pension

Retroactive Payments

Filing a claim to receive SSDI can be a lengthy process. Once the SSA approves your application and calculates your monthly benefit, you may be eligible to receive a back pay award. The back pay date depends on the day you applied for benefits and the date of your disability onset as determined by the SSA.

Work With a Special Needs Planning Attorney

A great deal is at stake when applying for SSDI benefits and assessing your monthly payment. Getting a general idea using the SSA online benefits calculator is a good start. However, nothing will replace the skills of an attorney with experience in this area.

They understand how Social Security works and can ensure your application is correct and complete. With their assistance, you can streamline the approval process and receive the benefits you deserve. Contact a qualified special needs planning attorney today for guidance.