How Are Your Social Security Benefits Calculated?

Social Security is one of the largest social programs in the country, and it safeguards a significant portion of the working population from poverty, if they can no longer work. However, Social Security is only a safety net meant to catch you if you slip, so it can be critical to know how benefits are calculated so you can properly manage your finances if you should ever need SSDI or SSI.

How Are Your Social Security Benefits Calculated?Photo of question

The first step to calculating your Social Security benefits is knowing if you even qualify for benefits. For SSI, your income will determine if you get benefits. The Social Security Administration (SSA) will examine your income, subtract income that isn’t a part of your countable income, and then subtract your earned income from the SSI benefit rate. So if you depend on SSI, it is important to budget not only your spending but how much you earn.

If you qualify for SSDI, then your benefits will be determined by how much you have paid into the system. The amount you’ve paid in Social Security taxes—covered earnings—is factored into a complex formula involving your average indexed monthly earnings (AIME), fixed percentages and several points where those percentages change. For example, if you earn $856 or less per month, 90 percent of your AIME will be added to your primary insurance amount (PIA), 32 percent will be added if you make more than $856 but less than $5,157, and so on. Having private disability benefits can also reduce how much you receive from the SSA, so keeping track of that is also key when you are making a monthly budget.

Knowing these facts is important to living day-to-day on your benefits check, so to learn even more, keep following our blog and post any other questions you might have on our Facebook and Twitter pages.

These facts are brought to you by the attorneys at Troutman & Troutman, helping Oklahomans with disabilities.


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