How Is the Amount of Social Security Disability Benefits Calculated?

Most of our clients at Attorney Scott London’s London Eligibility Advocates want to know how the amount of their Social Security Disability (SSD or SSDI) benefits is determined. We always want our clients to have a complete understanding of their SSD benefits and to feel confident that they are receiving the maximum SSDI benefit to which they are entitled.

This post will explain exactly how each SSD benefit recipient’s benefit amount is arrived at and what calculations are used to reach the final figure.

First — Find Your Lifetime Average Earnings

The Social Security Administration (SSA) keeps track of the taxable income you reported throughout your working life. You can access the numbers through the SSAs website at, on the “my SSA account” page.

The government finds your 35 highest-earning years and indexes those numbers with the average annual income for each year, adjusting your earnings upward by the average wage ratio from the previous year. It’s a bit complicated, but the net result either raises your figures slightly or makes no change.

When the SSA collects your highest-earning years, indexes them, and then averages them, the number reached in that process determines your Average Indexed Monthly Income (AIME).

Second — Apply This Formula to Your AIME

Once your Average Indexed Monthly Income (AIME) is determined, the SSA puts your AIME figure through the following formula to find the amount of your SSD benefit, also called your Primary Insurance Amount (PIA):


1). 90% from the first $996, plus

2). 32% from earnings over $996 but under $6,002, and

3). 15% of monthly earnings over $6,002.


A). 90% from the first $1,024, plus

B). 32% from earnings over $1,024 but under $6,172, and

C). 15% of monthly earnings over $6,172.

Example: Let’s say Mr. P becomes disabled in 2021.

If Mr. Penn applied for SSD/SSDI benefits in 2021, and his Average Indexed Monthly Income (AIME) was $4,085 the formula would be applied as follows:

1). 90% from the first $996

   A). ($996 x .90 = $896.40) plus

2). 32% from earnings over $996 but under $6,002

   A). ($6,002 – $996 = $5,006. Then $4,085 x .32 = $1,307.20) plus

3). 15% of monthly earnings over $6,002.

   A). (Since Mr. P’s AIME is $4,085, there is no amount over $6,200) ($0 x .15 = $0)

   B). Mr. Penn’s monthly SSD benefit amount would be $896 + $1,307.20 + 0 = $2,203.20 rounded to $2,203.00

Third — Annual Cost of Living Allowance (COLA)

Every year since 197, the Social Security Administration issues a Cost-of-Living Allowance (COLA) supplement to SSDI benefit recipients’ monthly payments. The COLA is adjusted each year to try to make SSD benefit payments keep pace with inflation.

The amount of each year’s COLA is based on any increase in the Consumer Price Index (CPI) for Urban Wage Earners and Clerical Workers (CPI-W) using Bureau of Labor Statistics figures. Essentially, the process aims to determine if wages have kept up with price increases. In years when the data shows inflation occurred since the last year a COLA was issued, the SSA issues a new increase in your monthly SSDI benefit.

Since the data collected from 2020 and 2021 show a high rate of inflation, the 2022 SSD COLA increase will be 5.9%. For our imaginary Mr. Penn from our example above, that 5.9% COLA bump would bring his monthly payment from $2,203.00 to $2,332.00, an addition of $120 each month, or $1,440 annually. This year is a remarkably large COLA increase due to the extraordinary economic disruptions related to the Covid-19 pandemic.

Your Monthly SSD Benefit Amount Is Equal to Your Full Social Security Retirement Benefit

Another common question we hear from our clients at Scott London Disability Law Office and London Eligibility is, “what happens to a person’s SSD benefit payment when they reach their retirement age and file for Social Security Retirement benefits?”

If you continue to receive monthly SSD benefits until you reach your full retirement age (FRA), then your payments will simply switch from SSD to Social Security Retirement without any change. The government uses the same formula to set your SSD payment amount as they use to set your full retirement benefit amount.

If someone getting SSDI benefits files for Social Security Retirement benefits early, say at age 62, then they will see an immediate 30% drop from their SSD payment. Why? Because SSD benefits are equal only to your retirement benefits at your “full retirement age,” or FRA. Depending on your birth year, your full retirement age is somewhere between age 65 and age 67. Filing for retirement before your FRA cuts your Social Security Retirement benefits permanently.

Get Expert, Professional Help with SSD/SSDI and SSI at London Eligibility Today

Only after many years specializing in SSD-SSDI and SSI benefits law did Scott London and his team of skilled SSD advocates obtain the expertise every SSD applicant can use to win the highest SSD benefits possible. London Eligibility works full-time every day to get the maximum SSD and SSI benefits every client deserves.