The Short Answer:
Social Security Disability Insurance (SSDI) payments are calculated using your average indexed monthly earnings (AIME)—your lifetime covered earnings adjusted for wage growth—and then applying the Social Security Administration (SSA) formula to find your primary insurance amount (PIA). Your PIA sets the baseline for your monthly SSDI benefit.
Key Takeaways
- SSDI payments are based on your AIME, which reflects your lifetime covered earnings, and are converted into a PIA using a federal formula.
- Tennessee follows the same federal rules as every other state—there are no special state-specific formulas.
- Public disability benefits, such as workers’ compensation, can reduce SSDI if your combined benefits exceed 80% of your pre-disability income.
- Private insurance or pensions do not reduce SSDI payments.
- Annual cost-of-living adjustments (COLA) can increase monthly payments over time.
- A Tennessee disability lawyer can help you verify your earnings record, appeal errors, and secure the maximum benefits you may qualify for.
Understanding Social Security Disability Insurance (SSDI)
SSDI provides income to people who have worked and paid Social Security (FICA) taxes long enough to earn work credits. Your payment is based on your lifetime covered earnings—the wages on which you paid Social Security taxes. The severity of your disability does not change the amount you receive.
To confirm that your income counts as covered earnings, check your pay stubs for Social Security or FICA tax withholdings. These wages are what the SSA uses to calculate your Average Indexed Monthly Earnings (AIME) and your Primary Insurance Amount (PIA), which determines your monthly benefit.
How to Calculate Your SSDI Payment
Step 1: Confirm Your Covered Earnings
Only wages on which you have paid Social Security (FICA) taxes count toward SSDI. Check your pay stubs or your My Social Security account to make sure your earnings record correctly reflects these covered wages.
Step 2: Find Your Average Indexed Monthly Earnings (AIME)
The SSA looks at your lifetime covered earnings and adjusts them for changes in average wages over time to calculate your AIME. This represents your average monthly income before you became disabled.
Step 3: Apply the SSA Formula to Find Your Primary Insurance Amount (PIA)
The SSA applies a formula—using specific “bend points” that change each year—to your AIME. The result is your Primary Insurance Amount (PIA), which sets the baseline for your monthly SSDI benefit.
Important Notes:
- Your SSDI amount does not depend on the severity of your disability.
- Having additional income or assets will not reduce SSDI benefits.
- Your final monthly benefit may be adjusted slightly for annual cost-of-living increases (COLA).
| Step | What It Means | Why It Matters |
|---|---|---|
| 1. Confirm Covered Earnings | Check your pay stubs or your My Social Security account to make sure your wages had FICA/SS taxes withheld. | Only these covered earnings count toward your SSDI benefit. |
| 2. Find Your AIME | SSA adjusts your lifetime covered earnings for wage growth to calculate your Average Indexed Monthly Earnings (AIME). | Your AIME is the average monthly income on which your benefit will be based. |
| 3. Calculate Your PIA | SSA applies a formula with yearly “bend points” to your AIME to determine your Primary Insurance Amount (PIA). | Your PIA is the base monthly SSDI benefit you can receive, before cost-of-living adjustments. |
Example: If You Earned $60,000 a Year
To estimate your Primary Insurance Amount (PIA), the SSA uses the 2025 bend points:
- First $1,226 of AIME: 90%
- $1,226 – $7,391 of AIME: 32%
- Over $7,391: 15%
Your AIME (average indexed monthly earnings) is roughly $5,000.
Step 1: 90% of the first $1,226
$1,226 × 90% = $1,103.40
Step 2: 32% of the next portion
$5,000 − $1,226 = $3,774
$3,774 × 32% = $1,207.68
Step 3: Add the results
$1,103.40 + $1,207.68 = $2,311.08
Other Factors That Can Affect SSDI Payments
Public Disability Offsets
If you receive public disability benefits, your SSDI may be reduced. This includes workers’ compensation, state temporary disability benefits, military disability benefits, or certain local or state government retirement benefits.
- The SSA sets a limit: the combined total of your SSDI and these public benefits cannot exceed 80% of your average pre-disability income.
- Exceptions: Payments from the Veterans Administration (VA) are not counted toward this 80% limit.
- Private insurance or pensions do not reduce your SSDI benefits.
Cost-of-Living Adjustments (COLA)
Each year, the SSA may increase benefits through a COLA, which is tied to the federal Consumer Price Index. This ensures your SSDI payments keep pace with inflation.
Returning to Work
If you’re able to return to work, the SSA provides a trial work period where you can test your ability to work without immediately losing benefits. After that, income limits determine whether your SSDI payments will continue.
Estimating Your Own Benefits
You don’t have to guess what your monthly disability payment will be—the Social Security Administration (SSA) provides free tools to help you estimate your benefits accurately.
Create a “My Social Security” Account
Set up a free account at SSA.gov/myaccount to review your lifetime earnings record. This record shows the covered earnings the SSA will use to calculate your AIME for SSDI.
Use the SSA’s Online Calculators
The SSA offers calculators that let you plug in your earnings history to estimate your SSDI payments, applying the current year’s bend points and formula automatically.
Check for Errors
Regularly review your earnings record to ensure every year’s wages are reported correctly. If a year of earnings is missing or misreported, your SSDI benefit could be lower than you may deserve.
What to Do if You Think Your Payment Is Incorrect
If you believe your SSDI payment is too low or your claim was wrongly denied, it’s important to act quickly. Errors in your Social Security record can cost you thousands of dollars over time, and the process for fixing them can be complex. An experienced Tennessee disability lawyer can help you protect the benefits you’ve earned.
Let an Attorney Guide You Through the Appeals Process
You have the right to appeal or request a reconsideration, but deadlines are strict and paperwork can be confusing. A lawyer from the McMahan Law Firm can handle the appeal on your behalf—filing the correct forms, meeting SSA deadlines, and building a strong case to defend your benefits.
Ensure Your Earnings Record Is Correct
Sometimes the issue is as simple as missing or incorrect earnings on your Social Security record. Our team can help you gather pay stubs, W-2s, and other proof of income to correct your earnings record and maximize your monthly benefit.
Get Local Help Right Away
You can always contact the Social Security Administration directly—use the SSA office locator to find your nearest Tennessee office—but having a McMahan Law Firm disability lawyer by your side gives you an advocate who understands both the law and the SSA’s procedures. We can communicate with the SSA on your behalf and make sure your case receives the attention it deserves.
Frequently Asked Questions (FAQs)
The SSA reviews inflation each year and typically applies a cost-of-living adjustment (COLA) annually. If there is an increase, your SSDI payment goes up automatically.
Yes, but there are limits. SSDI recipients may be able to work under a trial work period and earn up to a certain amount without losing benefits.
The SSA conducts Continuing Disability Reviews (CDRs) to check if you still meet disability criteria. If your condition improves significantly, benefits may be reduced or stopped; if it worsens, your eligibility and payment amount usually stay the same.
No. Private insurance or private pensions do not reduce your SSDI payments. Only certain public disability benefits, such as workers’ compensation or state disability payments, can reduce SSDI if total benefits exceed 80% of your pre-disability income.
