How are Social Security Disability Benefit Payments Calculated?
Social Security Disability benefit payments are calculated based on the amount of money an individual has earned over the course of their work life. Just like retirement benefits are calculated on how much someone paid into the system over the years, the Social Security Administration (SSA) will make a computation based on how long a claimant has worked and how much they have contributed to Social Security.
The amount of money you have earned is positively correlated with the amount you are eligible to receive in disability payments. However, there are both minimum and maximum amounts that are in place despite the individual's earnings.
The formula which the Social Security Administration uses can be confusing and difficult to understand. When calculating your disability benefit payments, they take into account the years you have worked and the income generated during that period of
time. Additionally, they factor in the median income for the position in which you worked in order to compute an average which they will base their award on.
This median income calculation is called the Average Indexed Monthly Earnings. or AIME. Once they determine the number of years worked and average the monthly earnings received, they will look at the years where the claimant had the greatest earnings. They will divide the total amount by the total months in those years, rounding down to the next lower dollar amount.
They will use this to take into consideration things like inflation and cost of living adjustments over the years the claimant has worked. Normally they will go back 35 years to gather this information; however that doesn't mean that you need to have worked 35 years in order to get disability benefits.Source: www.disability-benefits-help.org