Social Security Disability Insurance (SSDI) provides financial assistance to people with disabilities who are no longer able to work. The amount of SSDI benefits you receive is based on your lifetime average earnings. However, there are some things that can affect the amount of your monthly SSDI benefit.
Your earnings history
Your lifetime average earnings are used to calculate your basic SSDI benefit amount. Specifically, Social Security looks at your average monthly earnings over your highest 35 years of earnings. If you worked for more than 35 years, your lowest earning years are dropped out of the calculation. If you have less than 35 years of earnings, zeroes are averaged in for the remaining years.
Higher lifetime earnings result in a higher average and therefore a higher SSDI benefit. If your earnings were low early in your career and increased over time, dropping those early low-earning years from the calculation can boost your average. On the other hand, if your earnings peaked early in your career and then dropped off, the years with lower earnings will bring down your average monthly earnings.
It’s important to check your lifetime earnings record on your Social Security Statement to ensure all your earnings have been properly credited. Reporting any errors as soon as possible can help increase your SSDI benefit amount.
When you claim benefits
While you can claim SSDI benefits as early as age 22 if you have worked long enough to qualify, your age when you claim will affect the amount of your monthly benefit.
If you claim SSDI before your full retirement age (FRA), which is 66 or 67 depending on your birth year, your benefit will be permanently reduced. Claiming at age 62 results in a reduction of up to 30% compared to claiming at FRA.
On the other hand, if you have reached FRA and qualify for SSDI on your own work record, you have the option to delay claiming benefits in exchange for an increase up to age 70. Each year you delay results in an 8% boost in your eventual monthly benefit.
Choosing the optimal time to claim requires balancing your need for immediate income against the advantage of letting your benefit grow.
Cost of living adjustments
The base amount of your SSDI benefit will increase slightly each year to account for inflation. These cost-of-living adjustments (COLAs) are based on changes in a consumer price index.
COLAs were quite small for many years, averaging just 1-2% per year. However, rising inflation has led to substantially higher COLAs recently, including 5.9% for 2022 benefits and 8.7% for 2023.
Over the long run, COLAs help your fixed SSDI benefit keep pace with rising prices. But in any given year the COLA may not match the actual inflation you experience based on your spending patterns.
Income taxes
While you don’t pay Social Security taxes on your SSDI benefits, you may have to pay federal and state income taxes. Whether your benefits are taxed depends on your total combined income.
If your combined income exceeds the thresholds below, you will pay tax on up to 50% or 85% of your SSDI benefits:
| Filing Status | 50% Tax | 85% Tax |
|---|---|---|
| Single | $25,000 | $34,000 |
| Married filing jointly | $32,000 | $44,000 |
Strategies like minimizing other taxable income sources can help reduce how much tax you pay on benefits. You may also be able to claim valuable tax credits available to people with disabilities.
Dual entitlement
If you qualify for both your own SSDI benefit based on your work history and a spouse or ex-spouse’s Social Security benefit, you essentially get the higher of the two amounts. This is called dual entitlement.
For example, if your SSDI benefit is $1,500 but you would qualify for a $1,800 spouse benefit, you would receive the $1,800 spouse benefit. Or if your SSDI benefit is $2,000 and the spouse benefit is $1,500, you would receive your own $2,000 SSDI benefit.
When making the comparison, your spousal benefit is reduced if claimed before FRA while your own SSDI benefit is NOT reduced. So it’s advantageous to claim SSDI on your own record first.
Government pension offset
If you worked for a federal, state or local government and get a pension from that non-covered employment, it could reduce your Social Security spousal or survivor benefits through the government pension offset (GPO).
The GPO reduction is generally equal to two-thirds of your government pension. For example, if your pension is $600 per month, your Social Security spousal benefit of $500 could be reduced by $400 to $100.
The GPO does not affect your SSDI benefit based on your own work history. But it could greatly reduce any spousal benefits you are eligible for as a result of your spouse’s work record.
Workers’ compensation and SSDI
If you have a job-related illness or injury that resulted in workers’ compensation benefits, any workers’ comp you receive can reduce your SSDI benefits.
If your workers’ comp benefits start after you begin receiving SSDI, your combined benefits cannot exceed 80% of your pre-disability earnings. SSDI benefits are reduced to bring you under the 80% cap.
For example, if your pre-disability earnings were $5,000 per month and you receive $2,000 in workers’ comp benefits, your SSDI would be capped at $2,400 so your total doesn’t exceed $4,000.
On the other hand, if you were awarded workers’ comp first, your full SSDI benefit may still be reduced by some portion of your workers’ comp amount depending on state law. But in this case, your combined benefits can exceed 80% of prior earnings.
SSDI work rules
If you attempt to return to work while receiving SSDI, wages you earn may result in deductions from your monthly benefits. However, Social Security offers various incentives and support programs to help SSDI beneficiaries return to work.
During a trial work period (TWP) lasting up to 9 months, you can test your ability to work and earn an unlimited amount with no reduction in benefits. The months don’t need to be consecutive but must occur within a rolling 60-month period.
After completing the TWP, you’ll have a 36-month extended period of eligibility (EPE) where benefits continue as long as your work is not considered substantial gainful activity (SGA). In 2022, earning $1,350 per month or more is considered SGA.
If your earnings dip below SGA during the EPE, your full SSDI benefit will resume. Even after the EPE, you’ll receive benefits for any month your earnings drop below SGA under expedited reinstatement. SSDI work incentives provide flexibility to try returning to work without immediately losing benefits.
Imprisonment
If you are convicted of a criminal offense and imprisoned for more than 30 continuous days, your SSDI benefits will be suspended. Benefits to your spouse and children will also stop if they are based on your work record.
However, benefits are reinstated starting with the month following your release. You’ll need to provide documentation of your release date.
If you are released but imprisoned again within 12 months for 30 days or more for a different crime, benefits will not be reinstated after the second release until you have been out of prison for 30 straight days.
Probation or parole violations
If your benefits are suspended because you are confined to an institution by court order as a condition of your probation or parole, the situation is treated differently than regular imprisonment.
In this case, benefits are suspended starting only after you have been institutionized for more than 60 continuous days because of a parole or probation violation. And benefits will be reinstated starting with the month following your release.
Fugitive felons
As soon as warrant of arrest is issued because you are:
- Fleeing prosecution for a crime that’s considered a felony, or
- Violating a condition of probation or parole
your SSDI benefits will be suspended. Benefits restart effective the month the warrant is dismissed, but you’ll need to provide documentation.
Citizenship requirements
To qualify for Social Security benefits including SSDI, you must be one of the following:
- A U.S. citizen living in the 50 states, District of Columbia, or Northern Mariana Islands
- A U.S. national living in the 50 states, D.C., or Northern Mariana Islands
- A U.S. citizen living outside the U.S.
- A lawful alien residing lawfully in the U.S.
Your SSDI benefits will be suspended if you are deported or removed from the U.S. But your benefits can start again effective the month you are readmitted for lawful residence.
Change of address
It’s important to keep Social Security updated with your current mailing address. Otherwise, you could miss important notices affecting your benefits.
If benefits are suspended because Social Security needs updated information from you to confirm eligibility, you won’t receive back payments for missed months once the issue is resolved. Keeping your contact information current avoids benefit interruptions.
You can report a change of address conveniently online even if you live outside the country. Or call Social Security toll-free at 1-800-772-1213.
Conclusion
The amount of your SSDI benefit is determined primarily by your lifetime earnings history. However, many additional factors can impact the benefits you actually receive on a monthly basis.
Being aware of how these SSDI rules and provisions work can help you maximize the amount of benefits you’re entitled to. If you have any questions about your specific situation, contacting Social Security is recommended to protect your payments.
