People who apply for Social Security disability don’t know how much money to expect. Today, we’ll explain how to calculate it — and what does (or does not) affect your pay amount. The Social Security Administration’s benefits formula is actually a lot more complicated than you might think!
Understanding How the SSA’s Complex Benefits Formula Works
Your Social Security disability payment is based on how much you earned during the last 10 years you worked. The SSA averages your highest monthly earnings in the last decade. Then, they adjust that amount to account for this year’s current inflation rate. This is called your “average indexed monthly earnings,” or AIME. Then, they apply a complex formula to your AIME to determine your primary insurance amount, or PIA. (PIA is used to calculate your Social Security disability benefit amount.) The SSA uses three fixed percentages called “bend points” to find your PIA. What’s more, the agency updates these three specific bend points each year.
Here’s what that PIA formula looks like in 2020:
- Take 90% of your first $960 out of the AIME: $864
- Next, take 32% of your AIME that’s more than $960, but less than $5,785.
- Finally, take 15% of your AIME that’s more than $5,785.
- Add those three dollar amounts together.
- Then, round that amount up or down to the nearest multiple of $.10.
In plain English: Your Social Security disability benefit equals about 40% of your average monthly paychecks, adjusted for current inflation.
If that sounds unfair to you, it’s the same formula they use to calculate regular Social Security payments.
What Things Have Zero Impact On Your Social Security Disability Amount?
Some people believe worsening health problems should qualify them for more disability money. However, the federal government doesn’t see things the same way. Many people ask us about possible reasons to raise their Social Security disability payment amount, such as:
- Additional health issues that may also qualify as a disability
- Turning a certain age (i.e., 50, 60, etc.)
- Not having enough money for monthly bills (i.e., housing, food, medicine, doctor’s visits or transportation)
Is There Any Way to Get a Monthly Raise Once I’m On Social Security Disability?
Yes! In some cases, you can get paid more money each month. But these adjustments are usually pretty small, so don’t expect your payments to jump dramatically.
Things that can increase your Social Security disability benefits include:
- You paid more FICA taxes while working than you put on your Social Security disability application. Every year, the SSA reviews your IRS tax records. The good news is, they’ll likely catch this issue and adjust your payments automatically. You don’t need to do anything in order to make this happen.
- You join the Ticket to Work program and pay more FICA taxes. The Program’s designed to help you transition back to work as your health improves. You can work up to nine months before the SSA suspends monthly SSD payments. If your symptoms force you to stop working again, don’t worry! The SSA can re-calculate your benefit amount based on taxes paid during your trial work period.
- Your payments automatically go up in years with a cost-of-living-adjustment (COLA) increase. Every October, the SSA announces the next year’s COLA. It’s not guaranteed to happen every year, but when it does, it’s a percentage based on current inflation. The 2019 COLA was 2.8%; in 2020, it’s 1.6%.