Calculating Your Monthly Ssdi Payment
The exact amount of money people get for SSDI each month is unique for every individual. The Social Security Administration uses a complex weighted formula to calculate benefits for each person, up to 2022’s maximum benefit of $3,345.
Doing the math yourself is difficult, but here’s how the formula works.
AIME. Social Security bases your retirement and disability benefits on the amount of income on which you’ve paid Social Security taxescalled “covered earnings.” Your average covered earnings over the past 35 years is known as your “average indexed monthly earnings” .
Bend points. The SSDI formula uses fixed percentages of different amounts of income. These percentages, called “bend points,” are adjusted each year. In 2022, here are the bend points and how they come together:
- 90% of the first $1,024 of your AIME
- plus 32% of your AIME from $1,024 to $6,172
- plus 15% of your AIME over $6,172.
PIA. Adding those three figures together gives the SSA your primary insurance amount . Your PIA is the base figure the SSA uses in setting your benefit amount.
Speak With A Tacoma Social Security Disability Attorney
The process for obtaining SSDI or SSI benefits can be full of hidden landmines. If you have a question or if you need help obtaining benefits, contact Alliance Law Group today. One of our Tacoma Social Security disability lawyers can meet with you to review your options.
Please call . You can schedule a free initial consultation, where we will be happy to discuss the amount of disability benefits you might qualify for.
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Ssi Reform Would Boost Incomes For Seniors And Disabled People
Eighty-six years ago last month, President Franklin D. Roosevelt signed the Social Security Act into law. Upon giving life to Americas most cherished safety net program, Roosevelt :
We can never insure one hundred percent of the population against one hundred percent of the hazards and vicissitudes of life, but we have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age. It is, in short, a law that will take care of human needs and at the same time provide the United States an economic structure of vastly greater soundness.
To better fulfill this decades-old promise, policymakers should turn their attention to a related program: Supplemental Security Income . SSI is meant to help low-income seniors and people with disabilities who receive little support from Social Security. Although SSI is a crucial anti-poverty program, its current benefits are inadequate, and many of its eligibility provisions are outdated. To address these problems, President Joe Biden should call on Congress to pass the SSI Restoration Act during the upcoming budget reconciliation process.
President Joe Biden should call on Congress to pass the SSI Restoration Act during the upcoming budget reconciliation process.
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Not A Lot Of People Get The Maximum Amount
If you are disabled, you are probably considering how much you can expect to receive from Social Security for a disability benefit. There is a maximum amount, which is usually adjusted every year.
For 2019, the maximum amount is $2,861 a month. It might increase again depending on whether there is a cost-of-living adjustment for next year.
Few people receive the maximum amount in disability benefits, however. Instead, the amount you receive will be based on your earnings. Below, a Tacoma, WA Social Security disability attorney explains how the Social Security Administration determines the number of disability benefits.
Eligibility For Disability And Working
An applicant for disability benefits through the Social Security disability insurance or SSI programs must be making less than $1,310 per month to qualify for benefits. . Anyone working above those limits is considered to be doing “substantial gainful activity” .
However, people who are currently receiving SSDI who attempt to return to work can make more during a trial work program. A month counts as a trial work period month when an SSDI recipient makes more than $940 per month .
For people who are receiving SSI, the new federal income limit for SSI is $794 per month, but complicated rules govern what income is countable and what income is not. Over half of the income made by an SSI recipient is not counted toward the limit, so you can actually receive SSI until you make up to $1,672 per month . However, any income received between $0 and $1,672 will reduce the monthly benefit. In some states that make extra payments to SSI recipients, the income limit for SSI recipients may be higher.
The income exclusion amount for students receiving SSI is now $1,930 per month .
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How To Make More Than The Income Cap And Still Get Ssd Benefits
The TRIAL WORK PERIOD Program
Once the Social Security Administration realized that suspending the SSD benefits of a recipient who succeeded in earning more than the income cap in one month discouraged SSD beneficiaries from trying to work, the SSA needed to solve this dilemma. The SSA wanted to encourage SSD recipients to attempt a return to work, if they thought they were up to it. How else would a disabled person know what they were capable of achieving as time passed and their impaired condition improved?
The Trial Work Period program enables SSD recipients to try to resume working without fear of losing their monthly SSD benefit. Under the TWP plan, a disabled SSD recipient who thinks they may be able to return to work is free to try and continue to get their monthly SSD payments.
There are rules and limits to the TWP program, but the arrangement allows you to earn an unlimited amount of monthly income for a total of nine months. The nine months do not have to be consecutive. They can be spread out over a five-year period.
Which Months Count as Trial Work Period Months?
The Trial Work Period program can run for any nine months in a five-year period. So, which months count as TWP months? While you can earn an unlimited amount of income in each of the nine months of your TWP, any month in which you earn more than $907 is counted as one TWP month. In 2022, the TWP monthly trigger amount will be $970.
Find Your Base Period
Your benefit amount is based on the quarter with your highest wages earned within the base period.
A base period covers 12 months and is divided into four consecutive quarters. The base period includes wages subject to SDI tax that were paid about 5 to 18 months before your disability claim began. The base period does not include wages paid at the time your disability begins. For a DI claim to be valid, you must have at least $300 in wages in the base period. The following information may be used to determine the base period for your claim.
If a claim begins on or after January 1, 2021:
The base period is the 12 months ending last September 30. Example: A claim beginning February 14, 2021, uses a base period of October 1, 2019, through September 30, 2020.
The base period is the 12 months ending last December 31. Example: A claim beginning June 20, 2021, uses a base period of January 1, 2020, through December 31, 2020.
The base period is the 12 months ending last March 31. Example: A claim beginning September 27, 2021, uses a base period of April 1, 2020, through March 31, 2021.
The base period is the 12 months ending last June 30. Example: A claim beginning November 2, 2021, uses a base period of July 1, 2020, through June 30, 2021.
You can get a general estimate by using our online calculator.
Note: The calculator is intended to provide an estimate only. Your actual WBA will be confirmed once your claim has been approved.
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Ssi Steps In Where Social Security Falls Short
Although Social Security has not eliminated poverty-ridden old age, it nonetheless pulls more people out of poverty than any other government program, and it lessens the degree of poverty for millions more. Last year, Social Security helped more than 60 millionAmericans through the pandemic, distributing nearly $1.1 trillion to seniors, widows, widowers, orphans, half-orphans, and individuals with disabilities.
But by itself, Social Security does little to help the most extremely marginalized members of society. Thats because its a type of social insuranceand as insurance, it replaces a share of peoples wages when they lose a spouse or become too old or disabled to support themselves. Measured as a share of peoples pre-disability or pre-retirement wages, Social Security is progressive, directing the highest wage replacement rates to the lowest-wage workers.
Figure 1
But because the program distributes benefits as a share of former wages, low-wage workers receive low benefits. This is true even after accounting for the fact that these workers are given the highest wage replacement rates.
Figure 2
For a worker with average lifetime earnings of $25,000, Social Security benefits are less than $15,000 per year by contrast, a worker who made $150,000 receives $40,600.* Someone without any lifetime wagesand thus without any ability to save for retirementreceives nothing.
SSI alleviates destitution and brings millions of people above the poverty line.
Figure 3
Figure 4
Social Security Disability Benefits Pay Chart 2022
Social Security disability payments increased by 5.9% in 2022. See how much you can earn in this Social Security Disability Benefits Pay Chart guide.
The Social Security disability benefits pay chart applies only to payments through the SSI program. It does not apply if the benefits you receive are through the Social Security Disability Insurance program.
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Calculating Your Countable Income And Benefit
To calculate your countable income, Social Security subtracts amounts that it does not count from your gross income. Then, Social Security subtracts your countable income from the Social Security federal benefit rate to come up with the amount of your monthly SSI benefit. For more information, see our article on how much SSI pays.
To learn more about what counts as income, see Nolo’s article on countable income for Social Security.
Calculating Ssdi: Covered Earnings
If you are eligible for SSDI benefits, the amount you receive each month will be based on your average lifetime earnings before your disability began. This is the only factor that determines your benefit amount, although it may be reduced if you’re receiving disability payments from other sources . In other words, your SSDI benefit amount is not based on how severe your disability is, and unlike SSI, you cannot be denied SSDI because you have too much unearned income or too many resources .
Your past earnings must be covered under the Social Security program in order to count towards the amount of SSDI benefits you will receive. “Covered earnings” are wages you have received from jobs that have paid into Social Security. If you have 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 are covered earnings.
Your SSDI payment will be based on your average covered earnings over a period of years, known as your average indexed monthly earnings . A formula is then applied to your AIME to calculate your primary insurance amount the basic figure the SSA uses in setting your actual benefit amount.
For example, someone in their fifties who made $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.
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How Does Cost Of Living Affect Social Security Disability Payments
The Social Security Administration makes payment adjustments each year to people receiving Social Security disability benefits. The adjustment payments made through Social Security retirement, Social Security Disability Insurance , and Supplemental Security Income programs reflect cost-of-living adjustments. This COLA increase is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers. For 2021, the COLA adjustment is 5.9% for 2022.
How Your Ssdi Payments Are Calculated
The severity of your disability will not affect the amount of SSDI benefits you receive. The Social Security Administration will determine your payment based on your lifetime average earnings before you became disabled. Your benefit amount will be calculated using your covered earnings. These are your earnings at jobs where your employer took money out of your wages for Social Security or FICA.
Your SSDI monthly benefit will be based on your average covered earnings over a period of time, which is referred to as your average indexed monthly earnings . The SSA uses these amounts in a formula to determine your primary insurance amount . This is the basic amount used to establish your benefit.
SSDI payments range on average between $800 and $1,800 per month. The maximum benefit you could receive in 2020 is $3,011 per month. The SSA has an online benefits calculator that you can use to obtain an estimate of your monthly benefits.
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Can You Receive Retroactive Payments
Once the SSA approves your SSDI application and calculates your monthly benefit, you may be entitled to a back pay award. How many months of payments you will receive will depend on the date you applied for benefits and your disability onset date.
If you are applying for SSDI benefits, you need the assistance of a skilled Social Security disability lawyer to get your application approved and receive the benefits you deserve. To schedule a free consultation with a member of our legal team, fill out the online form on this page or call our Roswell office today.
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How We Pay Disability Awards
We pay permanent disability awards either:
- In a lump sum, when your overall disability rating is less than 10 percent and the monthly payment is less than $200
- On a monthly basis, when your overall disability rating is 10 percent or more and the monthly payment is more than $200.
If you would like us to deposit your permanent disability payments and all other future payments into your bank account, you can .
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What Are Work Credits
Work credits are accumulated over the years as you work in a job and pay Social Security taxes. You can earn a maximum of four credits each year. The number of work credits you need to receive SSDI benefits depends on your age when you become disabled.
Overall, you need 40 credits to receive SSDI benefits, but younger workers can qualify for benefits with fewer credits. Of the 40 credits, 20 credits must have been earned in the last 10 years ending with the year you became disabled.
Do Millionaires Get Social Security
Since Social Security benefits are capped, rich Americans dont receive much bigger checks than the middle-class. At full retirement age, the maximum benefit is $2,686. However, those who earn an 8% delayed-retirement credit by waiting until 70 to collect would receive a maximum of $3,547 per month.
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Are Social Security Payments Taxed
Yes and No. First, we are attorneys and not CPAs. Any tax question should be directed at your CPA or your tax preparer.
Generally, the IRS will tax your SSDI benefits when half of your benefits, plus other income, exceeds an income threshold on your tax filing status.
If youre filing single, head of household, married filing separately, or qualifying widower, the threshold is $25,000.
If youre filing married and jointing, that threshold is $32,000. And if youre filing separately but lived with your spouse during the tax year, the threshold is $0
Supplemental Security Income Benefits are not taxable.
Note: Visit irs.gov to learn additional information on paying taxes social security benefits.
How Does Ssi Decide My Benefit Amount
Eligibility for SSI depends on your income and resources.
Income is money that you earn, such as wages. Income also includes Social Security benefits, pensions, and food and shelter that you get without current employment. Your spouses income may be counted if your spouse does not get SSI. The more income you have, the less your SSI benefit will be.
Resources are things that you own and can turn into cash, and money that you already have. Property, stocks and bonds, and bank accounts are resources. Resources may be liquid or non-liquid.
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Canada Pension Plan Disability Benefits
The Canada Pension Plan provides monthly payments to people who contribute to the plan during their working years.
You may be eligible for CPP disability benefits if:
- you contributed to the CPP for a certain number of years
- you’re under 65 years old
- you have a severe and prolonged mental or physical disability
- your disability prevents you from working on a regular basis
The benefits include payments to children of a person with a disability.
Apply as early as possible if you think you’re eligible for CPP disability benefits. Quebec residents may be eligible for a similar program called the Quebec Pension Plan . It may take several months to process your application.
If you applied for CPP or QPP disability benefits and were told that you’re not eligible, you can ask to have your application reviewed or considered again.
Once you reach age 65, your CPP disability benefit will automatically change to regular CPP payments. Your regular CPP payments may be less than the CPP disability payments you got before.
If so, consider: