Ever looked at your disability payment and wondered, “How does the Social Security Administration decide how much money I get?” Trust us, you’re not alone. Many people don’t realize how the agency determines each person’s maximum Social Security disability benefit amount. These calculations change a little bit every year, and they include more than your work history or highest annual salary. The SSA’s formula uses your average indexed monthly earnings, fixed percentages, and even cost-of-living-adjustment (COLA) increases.
The agency uses this same math to figure out both disability benefits and regular Social Security retirement payments. Below, we’ll break down each step in the SSA’s formula for you, step-by-step. That way, new applicants can get an idea of what their maximum Social Security payment might be every month. And while the words they use are sometimes confusing, we’ll explain what each term means as we go along.
How the SSA Calculates Your Maximum Social Security Benefits Amount
Step 1: Find Your Average Indexed Monthly Earnings (AIME)
First, let’s look at your Average Indexed Monthly Earnings (AIME). To find this amount, the SSA looks at how much money you earned while working over a 35-year period. If you have copies of your taxes from previous years, that’s a good place to start. (And if you don’t have those records, you can always ask the SSA or IRS to send them to you.) Once you have these numbers, the SSA then “indexes” each year’s earnings. This “index” reflects how much wage levels change annually based on increases in the average American’s standard of living. This “index” number should also account for things like inflation.
The SSA’s formula uses your last 10 years of past earnings to determine your maximum Social Security payment. But what if you worked more than 10 years before filing your disability benefits application? In that case, they’ll choose the years you earned the most money while working after they index your wages. Then, they’ll add those years’ worth of indexed earnings together. Last, they’ll divide that number by the total months they represent. Once you do that, the final number you get is your personal AIME. You need that AIME to determine how much your maximum Social Security disability benefits amount might be every month.
Step 2: Calculate Your Primary Insurance Amount (PIA)
Your Primary Insurance Amount (PIA) tells you how much money you’ll get in monthly SSDI benefits. The SSA calculates this number using three different fixed percentages of your AIME they then add together. And while the percentages always stay the same, the three different dollar amounts based on your AIME change every year. These dollar amounts are known as “bend points,” which we will dive deeper into later.
Now that we know which numbers to look for, let’s look at the SSA’s internal PIA calculation formula. The agency’s PIA formula always uses the most current data from two calendar years prior to the current one. (That means the PIA formula below for calculating your maximum Social Security benefits uses bend point amounts from 2019.) Here’s the current PIA formula for people whose claims get approved for disability benefits this year:
- 90% of the first $996 of your average indexed monthly earnings, plus
- 32% of your average indexed monthly earnings over $996 and through $6,002, plus
- 15% of your average indexed monthly earnings over $6,002.
After calculating your PIA using the formula above, you’ll round that amount down to the nearest $.10. This final number should be your maximum Social Security benefits amount the SSA can pay you each month.
Understanding How Bend Points Affect Your Maximum Social Security Pay Amount
In step 2, I explained the monetary amounts used to calculate your PIA are called “bend points.” The SSA also uses bend points to calculate your family’s maximum Social Security benefit. If you die, your surviving spouse or dependents can apply for those maximum Social Security benefits. These family maximum Social Security payments are crucial for loved ones with little or no other income. Since the SSA determines each year’s bend points, the amounts shown above change annually.
The SSA bases each year’s new bend points on the national Average Wage Index (AWI) series. The AWI is always two years behind, so people applying for disability benefits in 2020 will use 2018’s AWI. When the SSA first established bend points in 1979, they used the AWI from two years earlier (1977). In 1977, the AWI amount was $9,779.44. Those initial bend points were $180 for the first PIA formula amount and $1,085 for the second amount. This is important to know because each bend point determined since then is based on these first two dollar amounts.
For example, here’s how to calculate the PIA formula’s first bend point for 2021:
- Start with the 2019 AWI amount: $54,099.99
- Multiply that number by $180: $9,737,998.20
- Then divide that number by $9,779.44: $995.76
- Round that up to $996, which is your final amount for 2021’s first PIA bend point
To calculate 2021’s second bend point:
- Start with the 2019 AWI amount: $54,099.99
- Multiply that number by $1,085: $58,698,489.15
- Then divide that number by $9,779.44: $6,002.23
- Round that down to $6,002, which is your final amount for 2021’s second PIA bend point
How to Look Up Historical PIA Bend Point Information
Wonder how much these PIA formula bend points changed since 1979? Check out the SSA’s bend points chart here. That page also shows bend points for the family maximum benefit formula going back to 1979. To determine the bend points for your dependents, you can apply the same technique we used above. The final number is your maximum Social Security payment available for your spouse and child(ren).
You May Qualify for Legal Assistance
If you find these complicated calculations and formulas confusing, you’re not alone. A lawyer can help you avoid mistakes that result in the SSA denying many eligible applicants benefits. In fact, having a Social Security attorney file your claim makes you 3x more likely to get disability benefits the first time you apply. Since these lawyers always work on contingency, you’ll pay $0 if the SSA won’t approve your claim. And if you do get benefits, then you’ll only pay a small, one-time fee.
People who qualify for legal assistance through this website typically get $12,000 in lump-sum backpay, plus monthly disability. The SSA usually denies benefits for most people who apply on their own without legal assistance. Those claimants may eventually get approved after appealing in court, which means they wait 18-24 months for SSD benefits.
Ready to see if you may qualify? Click the button below to start your free online benefits evaluation now!
Lori Polemenakos is Director of Consumer Content and SEO strategist for LeadingResponse, a legal marketing company. An award-winning journalist, writer and editor based in Dallas, Texas, she's produced articles for major brands such as Match.com, Yahoo!, MSN, AOL, Xfinity, Mail.com, and edited several published books. Since 2016, she's published hundreds of articles about Social Security disability, workers' compensation, veterans' benefits, personal injury, mass tort, auto accident claims, bankruptcy, employment law and other related legal issues.