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What Is Retirement, Survivors And Disability Insurance (RSDI)

Last updated: April 12, 2023

You should understand how Social Security Disability Insurance (SSDI) benefits are calculated, regardless of whether you are applying for benefits or want to ensure you receive all SSDI benefits you are entitled to. Using an SSDI calculator will better understand your situation and circumstances that may affect your benefits.

Remember that your monthly benefits do not depend on your disability's severity. When you are approved for SSDI benefits, the amount you receive is based on your average lifetime earnings before your disability began and whether you have other sources of income. Read on to understand better how SSDI benefits are calculated.

Calculating SSDI

Generally, SSDI recipients receive between $800 and $1,800 in monthly payments, with an average of $1,258 per month. However, actual payments vary according to each case.

Each person's benefits are calculated based on a weighted formula by the Social Security Administration (SSA). When calculating your disability benefits, covered earnings (income you have paid as Social Security taxes) play an important role.

Most wages and self-employment income are subject to Social Security taxation. AIME or the average indexed monthly earnings of your covered earnings. The primary insurance amount (PIA) is calculated by applying a formula to your AIME. The SSA uses that figure to set your benefit amount.

Calculating AIME

Your AIME is calculated after adjusting for inflation based on your highest 35 years of earnings. AIME is calculated for those without 35 years of work history by counting the years between turning 21 and becoming disabled. After they subtract five years or one-fifth of the total number of years, whichever is less, they subtract one-fifth.

Using the following example, you can figure out the number of years included in your AIME:

  1. If you become disabled at 43.
  2. By subtracting 21 years from 43 years, you get 22 years.
  3. If you multiply 22 years by one-fifth, you get 4.4 and round down.
  4. You can get 20 years by subtracting 22 years from 4 years.
  5. Your AIME will be determined using the 20 years you earned the most money.

Calculating PIA And Monthly SSDI Benefit

AIME is composed of three different percentages, each representing a separate portion of PIA, according to the SSA. PIA formulas have fixed percentages, but the national average wage index changes determine changes in dollar amounts.

Often referred to as bend points, these dollar amounts control the following parts of the AIME:

  • Bend Point #1: The SSA will take 90% of these earnings.
  • Bend Point #2: The SSA will take 32% of these earnings.
  • Bend Point #3: The SSA will take 15% of these earnings.

The bend points ensure that low-income workers receive a larger amount of benefits. The SSA website contains the bend points from 1979 to 2022.

Example Of Calculating PIA And Monthly SSDI Benefit

If you were approved for SSDI in 2020, you could calculate your benefits using a formula. For example, an applicant has an AIME of $3,500/month. Based on PIA, the dollar amounts in 2020 are $960 for the first bend point and $5,785 for the second bend point.

The next step would be to compute the PIA using these formulas:

  • Bend Point #1: $960 x 90% = $864
  • Bend Point #2: ($3,500-$960) x 32% =$812.80
  • Bend Point #3: No Bend Point #3 because earnings did not exceed $5,785
  • The sum of $864 and $812.80 will be equal to a total of $1,676.80

You will receive an estimated SSDI benefit amount based on your final PIA.

Helpful SSA Tools

Check your statement online at the SSA website to see your covered earnings history. There are also tools such as an online SSDI calculator that estimates your monthly benefits by entering your complete earnings history.

In addition, there is a more detailed calculator that provides a more accurate estimate of your monthly disability benefits and calculates both historical and future benefit estimates.

In many cases, the SSDI calculator matches the official calculations. Still, it is important to remember that they are not the same SSDI calculators used for official calculations. They may display a different result than an official calculation.

Effect Of Other Disability Payments

Specific rules and programs are in place for SSDI beneficiaries to work and receive benefits. Your benefits may be affected by certain earnings. Social Security offers the following work incentive programs to encourage people to work:

  • Trial Work Period
  • Extended Period of Eligibility
  • Expedited Reinstatement

The limits on your earnings, the time frames, and the deduction options may differ. An example of this would be that the trial work period would consist of nine cumulative months with a total income of over $910 per month while receiving your full disability benefits. The Social Security Administration gives you a 36-month extension period for keeping your benefits if you make no more than $1,260 per month.

The number of benefits you receive may decrease if you receive income from other sources, such as workers' comp and public disability benefits. You cannot receive more than 80% of your average earnings before becoming disabled if you receive workers' compensation, public disability, and Social Security Disability benefits.

The excess amount will reduce your Social Security benefit if the total amount of these benefits exceeds 80%. In other words, keep the Social Security Administration informed of any increase or decrease in your monthly payment or if you receive a lump-sum payment.

Your benefits are not affected by your payments through private pensions or insurance benefits. When you receive state or local government assistance, Veterans Administration (VA) benefits or Supplement Security Income (SSI), the Social Security benefit will not be reduced.

Applying for Social Security benefits can be an overwhelming process. If you seek SSDI benefits, check out our article on the top signs that your disability claim will be approved. To learn more, visit DisabilityHelp.org today!

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Chloe Powers
Chloe works with policymakers on behalf of Disability Help to support their work at a strategic level, ensuring the conditions are in place for creative individuals and organizations to grow, reach their potential and effect relevant, sustainable change.
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