Calculating Your Social Security Disability Payment

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 $1,537. The highest monthly payment you can receive from SSDI is $3,822 (the same maximum for retirement benefits, at full retirement age). 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.