List Each Year’s Earnings
In the table below, sample earnings for a hypothetical worker born in 1953 are shown in Column C. Only earnings below a specified annual limit are included. This annual limit of included wages is called the “Contribution and Benefit Base” and is shown as Max Earnings in Column H in the table.
How Ssdi Benefits Are Calculated
If you are applying for Social Security Disability Insurance benefits, your payment will be based on your average earnings before you became disabled. As a form of insurance, payments are higher for those who paid more taxes on their wages before becoming disabled. Your household income or the severity of your disability does not affect your benefit amount.
Your monthly SSDI benefit is based on your Average Indexed Monthly Earnings and Primary Insurance Amount .
Your AIME is calculated using up to 35 of your working years. The Social Security Administration adds together the years with the highest indexed earnings and divides them by the total number of months for those years. Then, the average is rounded down to reach your AIME.
Your PIA is the base amount of your benefits. It is calculated using the total of three fixed percentages of your AIME and bend points that change each year to reflect the national average wage index. You receive 90% of the earnings up to the first bend point, 32% of the earnings up to the second bend point, and 15% of earnings that exceed the third bend point.
To encourage recipients to return to work if they feel they are able to do so, the SSA has implemented a Trial Work Period of a total of nine months, not necessarily consecutive, over a 60-month period. During these nine months, you can earn an unlimited amount without your benefits being affected.
Substantial Gainful Employment Thresholds For 2019 And 2020
To qualify for disability benefits in the first place, you must not be engaging in substantial gainful activity . If you earn more than the prescribed income limit, you are engaging in SGA and therefore do not meet the SSAs strict definition of being disabled. Remember, the SSA considers only claimants with severe disabilities eligible for benefits, so making less than this income limit is one of the first factors in determining your eligibility.
The following are the most recent income limits for disability applicants:
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How Are Social Security Survivor Benefits Calculated
To understand Social Security benefit calculations, you first need to understand one piece of jargon: primary insurance amount . A persons primary insurance amount is the amount of their monthly retirement benefit, if they file for that benefit exactly at their full retirement age.
If your spouse has died and you file for a benefit as their survivor, your benefit will depend on:
- Your deceased spouses PIA,
- Whether your deceased spouse had already filed for his/her retirement benefit ,
- The age at which your spouse died, and
- The age at which you file for your benefit as a surviving spouse.
Lets first assume that you have reached your survivor full retirement age by the time you file for your survivor benefit.
If your spouse had not filed yet for his/her own retirement benefit by the time he/she died, then:
- If your spouse died prior to his/her full retirement age, your benefit as a surviving spouse will be your deceased spouses PIA.
- If your spouse died after reaching his/her full retirement age, your benefit as a surviving spouse will be whatever he/she would have received as a retirement benefit, if he/she had filed on his/her date of death.
If your spouse had filed for his/her own retirement benefit by the time he/she died, then your benefit as a surviving spouse will be the greater of:
- The amount your deceased spouse was receiving at the time of his/her death, or
- 82.5% of your deceased spouses PIA.
Spousal Benefit Reduction Due To Early Entitlement
If you file for a spousal benefit prior to your full retirement age, that spousal benefit will be reduced due to early filing. The reduction is 25/36 of 1% for each month early, up to 36 months. For each month in excess of 36 months, the reduction is 5/12 of 1%.
Example : Bobs full retirement age is 67. Bob files for his retirement and spousal benefits at age 65 . As a result, his spousal benefit will be reduced by or 16.67%.
The final calculation of Bobs spousal benefit will be 83.33% x . And to that, we would add Bobs own retirement benefit to find the total amount of his monthly benefit.
Disability Income From Other Sources
If you are receiving disability income from other sources, such as a private insurer or a provincial/territorial program, you may still be able to receive the CPP disability benefit. However, these other sources may change their payments if you are approved for the disability benefit through the Canada Pension Plan.
Contact your insurance company or social assistance program for details about your case.
How Are Social Security Disability Benefits Calculated
Mathematically speaking, Social Security Disability Insurance is calculated in the same way as Social Security retirement benefits. Both are based on your record of covered earnings work income on which you paid Social Security taxes.
The Social Security Administration starts by figuring your average monthly income across your working life, adjusted for historical wage growth. It then plugs that figure into a formula to determine your primary insurance amount , also known as your full retirement benefit.
The PIA formula is progressive weighted to provide proportionally higher benefits to lower earners and its the same whether youre claiming retirement or disability benefits. What differs is how much income data goes into determining your full benefit and when you can collect it.
For retirees, the SSA uses the 35 highest-earning years to calculate the monthly average income and PIA. You become eligible to claim that full amount at full retirement age, which is 66 and 2 months for people born in 1955 and is gradually rising to 67. Benefits are reduced if you claim earlier by as much as 30 percent if you start taking them at the minimum age of 62.
Exactly how much of your earnings history is included depends on arcane Social Security terms like elapsed years and computation years, but basically, heres how it works.
Regardless of your age, if your SSDI claim is approved, youll be awarded your full benefit 100 percent of your PIA.
Keep in mind
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Using The Social Security Disability Calculator To Estimate Benefits
When you apply for supplemental security income or Social Security Disability Insurance , how do you know what the award will be? Some claimants will be approved for one amount while others are approved for other amounts, and others still are denied altogether. What factors make that critical difference? How does the Social Security Administration calculate disability for 2019 and 2020? Its a complex process, but you can get a preview into your award by using Social Security calculators to estimate your monthly benefits. For help with your disability application and understanding how much your case might be worth, contact the Philadelphia disability lawyers at Young Marr & Associates today.
Spouses Survivors And Dependents
Spouses, survivors and qualifying dependents can collect Social Security benefits based on the primary insured’s PIA.
A spouse can claim 50% of the primary worker’s full PIA if they retire at the Normal Retirement Age or if they are caring for a qualified child. A spouse who is not caring for a qualified child and who retires after 62 but before their Normal Retirement Age will get reduced benefits down to a low of 32.5% of the primary worker’s benefit.
A qualifying child can claim up to 50% of a retired worker’s benefits or, if they are a surviving child, up to 75% of a deceased worker’s benefits. However, in cases where a family has multiple claimants , the combined family benefit is capped at between 150 – 180% of the primary worker’s benefits.
Finally, a surviving spouse who has reached their Normal Retirement Age can opt to collect their deceased spouse’s benefits instead of their own. In this case, they will receive 100% of the primary worker’s benefits. A younger widow/widower who is caring for a qualified child can collect 75% of the primary worker’s benefits.
You can only collect under one benefits program. Any beneficiary who qualifies for multiple sources of income will receive the higher of their qualifying benefits.
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And 2020 Income Limits And Maximum Ssi And Ssdi Payments
SSI and SSDI payments change every year to accommodate economic fluctuations. This is referred to as a cost-of-living adjustment . Aside from the actual payments, other numbers and thresholds change from year to year according to the COLA, and these numbers are also taken into account in the process of qualifying for benefits and determining how much your benefits will be.
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 Social Security Works
The Social Security Administration uses a multi-step formula to calculate just how much any given American gets in benefits. Factors include marriage, lifetime contributions, work history and more. But the purpose is always the same: to make sure that everyone who works has a safety net for retirement. To understand just how important that is we have to recall how senior citizens lived before President Franklin Roosevelt’s administration invented this program.
Although precise measurement hadn’t yet begun, most estimates suggest that in 1934 approximately half of all seniors lived in poverty. Most estimates suggest that this figure would have changed little over the past 84 years without the Social Security program. Instead, by 1959 this figure had fallen to 35%. By the year 2000 only 1-in-10 seniors lived in poverty, a number that has stayed largely consistent to this day. In many very real ways, Social Security created the concept of retirement.
Of course, there’s still far to go. Nearly a third of seniors still live within 200% of the poverty line, and many more still struggle to pay their bills.
How Is Social Security Disability Or Ssi Calculated
If you are in the process of applying for Social Security disability benefits or Supplemental Security Income , you may be wondering what your maximum monthly benefit payment is. You can quickly find this out by contacting the Social Security Administration to receive an estimate or you can visit our website for a quicker response and use the disability calculator.
The monthly benefit for SSDI is based on a complex formula, while the benefit for SSI is relatively simple. Both formulas will be described in this article, as well as some general details about financial eligibility for these programs.
It is important to mention that if you believe that you are disabled, you should get started with your application right away, because there are many factors involved in determining your eligibility that the SSA will consider.
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Calculating Your Benefit Amount
The formula for calculating your Social Security benefits and your Disability benefits is exactly the same right up until the very end. Well get into how it diverges in the next section, but for now, well focus on the shared process.
The first step is calculating your average indexed monthly earnings . The Social Security Administration will take your 35 highest-earning years into consideration. For each of those years, it will index your income for inflation and include it up to the taxable maximum . For tax year 2020, this point is $137,700.
Next, the SSA will add up these totals and divide to get your AIME. If you have more than 35 earning years, your lowest years will be excluded. If you have less, the SSA will include a $0 in the calculation for every year youre short.
The last step is to calculate your primary insurance amount from your AIME. To calculate your PIA, the SSA will take a percentage of three different chunks of your AIME. The exact amount of these portions will differ slightly depending on the year you become disabled or turn 62. If you do either in 2021 the SSA will take 90% of your first $996, 32% of the amount between that and $6,002 and 15% of anything that remains. The total is your PIA.
Reductions To Ssdi Benefits
Certain monetary benefits from other sources may affect your Social Security payments. SSI and VA benefits will not affect your SSDI benefits. If you are granted benefits from a private long-term disability insurance policy, your SSDI benefits will not be lowered .
On the other hand, payments from government-regulated disability benefits, such as workers compensation, or temporary state disability benefits, will affect how much you can earn monthly. Normally, the amount you receive in benefits cannot be more than 80% of the average amount you earned before you became disabled. In some states your SSDI award will be reduced if you do receive more than 80% of your past earnings, while in other states the other benefit, such as workers compensation, will be reduced instead.
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Earned And Unearned Income
Social Security counts your earned and unearned income differently:
- Earned income is money you get from work you do, including salaries, wages, tips, bonuses, professional fees, or other money you get in exchange for work.
- Social Security only counts about half of your earned income.
The bottom line: If you work, you usually end up with more money, because your SSI benefits only go down by about 50 cents for every dollar you earn. Learn more about rules that help people who work while they get SSI benefits.
How Can I Find Out More About Ssdi
- Visit www.ssa.gov online choose disability
- Visit ssabest.benefits.gov to learn about Social Security benefits you might be eligible for including SSDI
- Go to your nearest Social Security office
You can find out how much you would get from SSDI by looking at your Social Security statement. The statement shows your work history and an estimate of what your benefits would be at this time. To get a Social Security statement:
- Request a statement online through Social Securitys website at www.ssa.gov. Click on My Social Security on the left side of the page.
Note that SSDI is different from SSI . SSI is for people with disabilities or who are at least 65 years old and who have limited income and resources. See our information on Supplemental Security Income .
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Your Ssdi Amount Can Be Reduced From Other Disability Payments
If you receive payments from a long term disability insurance policy, your SSDI payments will not be affected. However, payments from other government run disability programs such as state disability benefits or workers comp payments can reduce your SSDI payments.
If your earnings from government run disability programs like workers comp combined with your SSDI earnings exceed 80% of your average income before you became disabled, your SSDI payments will be reduced.
VA and SSI benefits do not reduce your SSDI benefits, however your SSDI benefits can reduce your SSI benefits.
Financial Eligibility for Social Security Disability
The financial eligibility requirements for SSDI and SSI differ. In order to receive SSDI, the prospective recipient must be able to demonstrate they have a disability that is medically determinable, that will continue to last no less than twelve months, and that prevents the individual from engaging in substantial gainful activity.
Income Tax Law Changes
However, you’ll only qualify for excess spousal benefits if your husband’s primary insurance amount is more than twice as much as your PIA. A person’s PIA is equal to their Social Security retirement benefit rate if they start drawing their benefits at full retirement age .
For example, say Mary files for her Social Security retirement benefits at 62. Mary’s PIA is $800, but Mary’s benefit rate is reduced for age to $563. Several years later Mary’s husband applies for his benefits, and his PIA is $2,000.
But if Mary becomes eligible for spousal benefits prior to FRA, her spousal rate would also be reduced for age.
Before deciding when to start drawing your benefits, you may want to consider using my company’s software Maximize My Social Security or MaxiFi Planner to fully analyze your options so you can make informed decisions about your best strategy for maximizing your benefits and avoid unknowingly leaving money on the table. Social Security calculators provided by other companies or non-profits may provide proper suggestions if they were built with extreme care. Best, Larry
How Much Can I Make Without Any Penalties If I Receive Social Security Disability Benefits?
Hi Larry, I’m on Social security disability. How much can I make while I’m on disability without any penalties? And can I even work at all while I’m on disability? If I can and there’s presumably a limit, is it a monthly amount or a specific dollar amount? Thanks, Joshua
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