If you are like me, you are a budgeter. You want to know exactly how much income is coming in every month so you can budget your money accordingly. Not having a clear budget set may cause anxiety. So it is not surprising that one of the most common questions we get asked is how much money you will receive once approved for Social Security Disability benefits. Our answer is always the same, there is no way we can know that right off the bat. The amount is set by Social Security and will not be determined until after you are already approved for benefits. However, depending on what type of benefit you qualify for, we can get a rough estimate.
Supplemental Security Income (SSI)
We will start with the easy one. If you have insufficient work credits to qualify for DIB benefits you may qualify for SSI benefits which is a needs based benefits and based solely on household income. The amount of SSI benefits you receive each month is therefore dependent on how much income is coming in each month.
Social Security will start with what they call the Federal Benefit Rate or FBR. The FBR is the maximum amount of benefits you can receive on SSI. This amount is changed periodically for inflation but currently is set at $735 a month. Next, Social security will look at what income and benefits is coming in to your home and for some benefits, that amount will be subtracted from the FBR. Income that can be counted against your benefit may include:
- Wages or any other money you earn from working
- Certain types of payments you receive such as alimony, child support, or VA benefits
- Money friends or family gives you towards your living expenses
- A portion of income earned or received by other people in your home, typically this is only applied for spouses but live in significant others can affect it as well
Income NOT counted towards SSI benefits can include:
- The first $20 a month of all un-earned income, this includes any of the sources above
- The first $65 of all earned income
- Food Stamps
- Home Energy Assistance Benefits
To further illustrate we can give an example. Mandy was just approved for disability benefits. Mandy is currently receiving $100 a month in child support and is making $100 a month with her etsy craft shop. She also receives $235 in food stamps. To determine how much Mandy will receive let’s look at the formula.
Total Benefit Received=FDR – (earned income-$65) – (unearned income – $20)
$620= $735 – ($100-$65) – ($100-$20)
Mandy’s total benefit will be $620 a month.
Disability Insurance Benefits (DIB)
DIB benefits are much more complicated to figure out. Because DIB benefits are dependent on your past work history, it is your past income that determines how much you will receive moving forward. Currently, the top dollar amount you can receive in DIB benefits is $2,687 per month and the average DIB benefit is $1,171. To calculate how much a person will receive, Social Security first calculates your Average Indexed Monthly Earnings (AIME) and your Primary Insurance Amount (PIA).
Average Indexed Monthly Earnings
First, SSA will calculate your AIME by looking at your past work history. To determine this they will take the age you became disabled, subtract 21 years off of it since you were obviously not working as a child, then subtract an additional fifth off to determine your number of working years. They will then add your salaries from your “working years” which are adjusted for inflation, then divide it by the number of working years. For example, say you were disabled at age 35.
14*5%= .7 (rounded up to 1)
Total Amount of Working Years=14-1=13
In our example Social Security would then look at the highest 13 working years and take the average of those. 13 years. It is important to note that if you had not worked a full 13 years it will negatively affect your AIME.
Primary Insurance Amount (PIA)
If you got lost at all figuring out your AIME benefits you are in for a whirlwind for figuring out PIA. It’s difficult to calculate and even harder to explain. Boiled down as simply as possible, Social Security is going to take your AIME, split it up into three portions, and give you the sum of a percentage of each portion. These portions are called bend points.
- The first bend point is the first $885 of your average monthly wages. Social Security will take 90% of that first $885.
- The second bend point is the portion between $885 and $5,336. Social Security will take 32% of these earnings.
- The last bend point is anything above $5,336. Social Security will take 15% of these earnings.
To help illustrate the point we will give a couple examples. Lets say Anna was making $7,000 a month before she became disabled (wouldn’t that be nice!)
For the first bend point Social Security will take the first $885 and give her 90% of that. So $885*90%= $796.50
For the second bend point Security will take all income between $885 and $5,336.00 which for Anna is the full $4,451, and they will give her 32% of that. So $4,451*32%= $1,424.32.
For the last bend point Social Security will take all income above $5,336 so for Anna that is $7,000-$5,336 or $1664. Social security will take 15% of these earnings so $1664*15%=$249.60
So to figure Anna’s total benefit per month we will add all the bend points together so $796.50+$1,424.32+$249.60= $2,470.42.
For our second example we can look at Andrew, Andrew’s AIME was calculated to be $2,500 per month.
For the first bend we have the first $885 per month * 90% = $796.50
For the second bend we take all of Andrew’s income between $885 and $5,336. Since Andrew only made $2,500 per month we will take $2,500-$885= $1615. Social Security will take 32% of that $1,615 so $1,615*32%=$516.80
Since Andrew did not make over $5,336 there is no bend 3.
So to figure Andrew’s benefit we will add the amounts from bend 1 an 2 which are $765.50+$516.80=$1,282.30
Figuring Out Your Disability Benefit
If you are lost, not to worry you aren’t alone. The most you will be able to predict is a rough prediction because we don’t know how much Social Security will allow for inflation in each calendar earning year. Even if you have all the information you need, calculating the amount is not a simple task. If you are having trouble with it our Disability Attorneys will be happy to help. Give our office a call today, we can help you out with even the most confusing aspects of your claim.