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How are Social Security disability benefits calculated?

By

Andy Markowitz,

 
AARP
Comments
Published September 21, 2021
/ Updated December 18, 2023

Mathematically speaking, Social Security Disability Insurance (SSDI) 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 (SSA) 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 (PIA), also known as your full retirement benefit.

The PIA formula is progressive — weighted to provide proportionally higher benefits to lower earners — and it’s the same whether you’re 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. (Only yearly earnings up to an annually adjusted cap are counted. In 2024, the cap is $168,600.) You become eligible to claim that full amount at full retirement age, which is 66 and 6 months for those born in 1957 or 66 and 8 months for those born in 1958 and 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.

Because a worker may become disabled before reaching retirement age, Social Security uses a different time frame to determine the primary insurance amount for SSDI claims. The number of years of income used to figure the benefit depends on the age you became unable to work due to an injury or illness — the SSA’s basic definition of disability. 

Exactly how much of your earnings history is included depends on arcane Social Security terms like “elapsed years” and “computation years,” but basically, here’s how it works.

  • The SSA counts up the number of years from the year you turned 22 to the year before you became disabled​.
  • It throws out between one and five years (the longer you’ve been working, the more “dropout years”).​
  • The resulting number is how many of your highest-earning years will go into the PIA calculation. 

Suppose you’ve been working without interruption since age 21 but are sidelined at 60 by advanced rheumatoid arthritis. Applying its computation rules, Social Security would use your 33 best years of income, indexed for wage trends, to figure your PIA. If your disability struck at 50, it would be your 23 highest-earning years; at 40, the top 15 years.

Regardless of your age, if your SSDI claim is approved, you’ll be awarded your full benefit — 100 percent of your PIA.

Still, that full payment tends to be lower for SSDI recipients than for retirees, in part because your disability can cost you higher-earning years that would boost your calculated benefit. After an 3.2 percent cost-of-living adjustment, the estimated average monthly retirement and SSDI benefits in January 2024 are $1,907 and $1,537, respectively, according to SSA data. If you have an online My Social Security account, you can check your projected retirement and disability benefit amounts. 

Keep in mind

  • SSDI benefits can be reduced if you are collecting other public disability payments, such as state disability benefits or workers' compensation. There is no reduction for private disability benefits, such as payouts from commercial insurance.
  • If you are still getting SSDI when you reach full retirement age, your disability benefit converts to a retirement benefit, usually at the same amount.
  • The earnings-based benefit calculation does not apply to Supplemental Security Income (SSI), the other SSA-run benefit program serving people with disabilities. SSI eligibility is based on financial need, and benefit amounts are set by the federal government, without regard to a recipient’s work history.

Andy Markowitz is an AARP senior writer and editor covering Social Security and retirement. He is a former editor of the Prague Post and Baltimore City Paper.

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