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Average Indexed Monthly Income (AIME) to Calculate Your Social Security Disability benefits

Average Indexed Monthly Income (AIME) to Calculate Your Social Security Disability benefits

Disability claims taken either under SSI or SSDI use the same criteria for medical evaluation. Read more on that here. However, what you receive under each program depends solely on how much Social Security Taxes you paid under your wages. The Social Security Administration, SSA uses two basic formulas to calculate your SSDI benefits.

The SSA uses your Average Indexed Monthly Earnings (AIME) and Primary Insurance Amount (PIA) to calculate your benefits. The formula Social Security uses is quite complicated, and most people won't be interested in trying to calculate their benefits on their own, especially because Social Security can give you an estimate.

To calculate an approximate income idea, for 2021, the average SSDI benefit amount is $1,277 per month, but those whose income was fairly high in recent years can receive up to $3,148.

Average Indexed Monthly Earnings

Indexing brings nominal earnings up to near current levels. For example, if you had earned an average of $10,000 in the year 1979 while he was born in 1953 then the wage index factor will determine the wage he could be earning today equalling the same wage he earned in 1979, in this case, it would be around $40,000. The total indexed wage earnings are then divided by the total indexed factors to calculate an estimated AIME. You can calculate or have a rough estimate of your AIME through this chart.

The SSA will use up to 35 of your earning years in the calculation. The SSA will take the years with the highest indexed earnings, add them up together and divide them by the total months in the indexed years.

Primary Insurance Amount

The primary insurance amount, PIA is the base amount of your benefits calculated through your lifetime wages. The SSA will use a total of the three fixed percentages of your AIME to calculate your PIA. The SSA changes the bend points (dollar amounts resulting from averaging the three AIME) each year to reflect an average national indexed wages. You can see a table of bend points here 

COLA specifics

For many beneficiaries, the 1.3% COLA increase comes as a surprise as it is a lower bump than last year's 1.6% COLA increase for the year 2020. As a result, the 1.3% COLA increase for 2021 will mean only an increase of $20 per month, raising the average monthly payout to $1,543 for 2021 from $1,523 in 2020. The average COLA over the decade had been 1.52% increase, with the highest being 2.8% rise that went into effect in January 2019. Yet, for the years January 2011 to January 2016, there had been no COLA increases.

In spite of the lower COLA increases, the FICA tax rates had risen to 15.3% from 12.4%. Among this, the beneficiaries will have to pay 6.2% FICA taxes into their Social Security system. So, as the total income subjected to these FICA taxes increases, the maximum benefit also increases. For 2020, the maximum benefit was $3,011, whereas for 2021 it will be a rise of $137 making it a maximum of $3,148.

Your income statement

The easiest way to estimate your benefits is to check your income statement if you have been paying social security taxes. You can see the amount of earnable disability benefits estimated on your income statement bill. Or you can go to the government website here to check your statement online to determine how much benefits you will earn if you became disabled this year. 

For more information, you can contact our social security attorneys for legal guidance.

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Friday, 07 May 2021