How Is Social Security Calculated?

On This Page

1. How Does the SSA Calculate SSDI?
2. How Does the SSA Calculate SSI?
3. Why Partner With a Disability Lawyer From Our Firm?

REVIEWED BY

C. William Kenny

January 01, 2024

Board certified by National Board of Trial Advocacy

The Social Security Administration (SSA) offers two disability programs: Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI). The SSA calculates your disability benefits based on what program you’re applying to. Consider the following: 

• Your SSDI benefits depend on your average lifetime earnings prior to your disability  
• SSI benefits is a set amount, minus any sum that the SSA deems to be countable income

While the basic formula remains the same, the SSA makes small changes from year to year. With our law firm’s help, we can evaluate your case and determine what you’re eligible to receive. 

How Does the SSA Calculate SSDI?

As noted, the SSA calculates SSDI based on your average income in the years leading up to your disability. To qualify, you must have earned a certain number of “work credits” based on your age. 

If the SSA approves your application for SSDI benefits, they will calculate your benefit amount by: 

Considering Your Previously Earned Income

The SSA considers your income over the years you worked and whether your jobs paid Social Security taxes. The SSA then averages these amounts. This calculation is the Average Indexed Monthly Earnings (AIME), and its purpose is to standardize your earnings over time.

Applying a Certain Formula

Next, SSA applies a complex formula to your AIME to determine your Primary Insurance Amount (PIA). This formula relies on set dollar amounts—known as “bend points” ––that change each year.

For 2022, the SSA calculates your PIA using the first $1,024 of your AIME, the amount between $1,024 and $6,172, and the amount above $6,172. So, your PIA would be the total of:

• 90 percent of the first $1,024 of your AIME; plus
• 32 percent of your AIME above $1,024 and below $6,172; plus
• 15 percent of your AIME above $6,172.

To determine your PIA, you would apply these percentages to your AIME and note the total. If you’re still confused, don’t worry; the SSA provides an online benefits calculator. This allows you to get an estimate of what you’re entitled to receive. 

How Does the SSA Calculate SSI?

SSI is for low-income individuals who do not have enough work credits to qualify for SSDI. Generally, you cannot have more than $2,000 in countable assets to remain eligible. 

The SSA establishes standard SSI benefit amounts each year and publishes that information on its website. Your SSI benefits is the amount listed minus any countable income. Countable income is your total income minus any allowable income exclusions for both earned and unearned income.

Earned income exclusions include the following:

• The first $65 you earn each month plus one-half of the remainder of your monthly income
• Impairment-related work expenses for disabled individuals
• Income saved or set aside to achieve self-support for a disabled individual
• The first $30 of irregular income you receive in a quarter

Unearned income exclusions include the following:

• The first $20 you earn per month
• Income set aside for achieving self-support by a disabled individual
• Needs-based assistance from a state or local agency
• Rent subsidies from federal programs and the value of food stamps
• The first $60 of your quarterly irregular income

Still confused about SSI benefits? Just like SSDI benefits, you can calculate your potential benefits by using the SSA’s calculator. 

Consider This Hypothetical Scenario

We know that this formula can get confusing. So, here’s an example to better understand these calculations: 

• John is unmarried, disabled, and has less than $2,000 in countable assets, so he qualifies for SSI. 
• John is a veteran, so he gets $400 in VA compensation each month, and he works part-time at a gas station where he earns $300 a month. 
• In 2022, the maximum federal SSI payment is $841. 
• The SSA will subtract the $20 unearned income exclusion from his VA benefits: $380. 
• Next, the SSA will subtract $65 from his earned income: $235. 
• Now, the SSA will subtract $380 from $841: $606. 
• Then, it will subtract $235 from $606: $371. 

In the end, John will receive $371 in SSI benefits a month. But remember: he gets $400 from VA and $300 from his job. So, he’ll get $1,071 a month. Depending on where he lives, the state may supplement his income further.  

Why Partner With a Disability Lawyer From Our Firm?

Understanding how the SSA calculates benefits is one thing; actually applying for benefits is a completely different matter. Berger and Green has helped thousands of claimants apply for disability benefits. Our co-founder, Cynthia C. Berger has reviewed thousands of disability claims while serving injured claimants. She’s also the author of the best-selling book “Social Security Disability Benefits: What You Need to Know.” 

While you can apply for benefits by yourself, facing a denial can set the process back months––or even years. Our attorneys are confident in our abilities to estimate the value of your benefits. We can review your application and help with a claim denial. To begin your free case review, dial (412) 661-1400.