If you become disabled and need to apply for Social Security Disability (SSD or SSDI) benefits, you want to know how much you will receive in your monthly payment. This is the first question our clients ask us at London Eligibility Advocates for Social Security Disability.

This blog explains exactly how the amount of your SSD benefit payment is determined by the Social Security Administration (SSA). As you will see, the benefit amount paid to each recipient varies because the amount of the payment is based on each worker’s lifetime earnings record.

How Does Social Security Determine My Social Security Disability (SSD) Benefit Payment?

The amount of your Social Security Disability benefits payment is the same as you will receive in your Social Security retirement benefit. The Social Security Administration (SSA) uses the same formula to determine both figures.

The SSA refers to your SSD benefit payment amount as your Primary Insurance Amount (PIA). To find your individual PIA, the government begins by looking at the 35 highest annual incomes you earned over the course of your working life.

Step 1. Find Your Average Indexed Monthly Earnings (AIME)

To determine your monthly SSD benefit payment, start by finding your highest 35 annual incomes. The SSA then “indexes” the annual incomes it has identified as your 35 highest.

Indexing is a process the Social Security Administration uses to adjust each of your annual incomes considering the average national income for that particular year and the increase in the cost of living over the years since you earned that income.

Once the SSA has indexed each of your 35 highest-earned incomes, those indexed incomes are added together. That sum is divided by 35 which reveals your average indexed annual earnings. To find the figure corresponding to your Average Indexes Monthly Earnings (AIME), which is the key number used by the government to find your benefit rate, the SSA divides the average yearly earnings figure by 12.

The resulting Average Indexed Monthly Earnings (AIME) is the figure that will be put through a set formula that will identify your Primary Insurance Amount (PIA). You will receive that amount each month as an SSD benefit payment and as your Social Security.

Let’s look at the formula and then try a few examples.

The Formula to Determine Your SSD Benefit Amount

The formula is essentially a series of equations through which your AIME is processed. The purpose is to determine everyone’s monthly benefit amount fairly. Those SSD recipients who had higher earnings through their working years get the smallest percentage of those earnings counted for purposes of SSD benefits calculations.

Here is the formula SSD uses to determine your monthly SSD benefit amount:

Begin with your Average Indexed Monthly Earnings:

• 1). Add 90 % of the first $1,115 of the person’s AIME, plus
• 2). 32 % of the AIME between $1,115 and $6,721, plus
• 3). 15 % of the AIME above $6,721.
• 4). Then round down to the nearest $0.10 if not already a multiple of 10.

The resulting figure is the person’s Primary Insurance Amount (PIA), or monthly benefit amount.

Example 1:

If an SSD applicant (we’ll call them Pat) had an Average Indexed Monthly Earnings (AIME) of $7,250, this is how their monthly SSD benefit payment would be determined:

• 1). Add 90 % of the first $1,115 of Pat’s $7,250 AIME. ($1,115 x .90 = $1,003.50) plus
• 2). 32 % of the AIME dollars between $1,115 and $6,721
  • A). $6,721 – $1,115 = $5,606.
  • B). $5,606 x .32 = $1,793.93, plus
• 3). 15 % of the amount of AIME ($7,250) dollars above $6,721.
  • A). $7,250 – $6,721 = $529

Add $1,003.50 + $1,793.92 + $529 = $3,326.42, then round down to the nearest $0.10 = $3,326.40.

In this example, Pat’s monthly SSD benefit payment will be $3,326.40.

Example 2:

Let’s go through another example, this time with someone who is earned a little less income over their working years. In this example, we’ll use a hypothetical person named Tracy. Tracy’s Average Indexed Monthly Earnings (AIME) will be set at $5,750.

• 1). Add 90 % of the first $1,115 of Tracy’s $5,750 AIME. ($1,115 x .90 = $1,003.50) plus
• 2). 32 % of the AIME dollars between $1,115 and $6,721
  • A). $5,750 – $1,115 = $4,635.
  • B). $4,635 x .32 = $1,483.20, plus
• 3). 15 % of the amount of AIME ($7,250) dollars above $6,721.
  • A). Zero, because Tracy’s AIME is less than $6,721. Therefore, the last entry will be $0.00.

Add $1,003.50 + $1,483.20 + $0.00 = $2,486.70 then round down to the nearest $0.10 = $2,486.70. (no need to round down because the figure is already a multiple of 10.

Here, Tracy’s monthly SSD benefit payment will be $2,486.70.

Get Help Figuring out What Your SSD Benefit Payment Will Be

The formula the government uses to determine the amount of your monthly SSD benefit payment (and your retirement benefit) is not too difficult. What may be confusing for most people is “indexing” the 35 highest earned incomes. Don’t worry. We’re here to help. If you have any questions or need assistance answering any questions relating to your Social Security Disability benefits, please contact us at London Eligibility anytime.