Social Security Disability Insurance (SSDI) is a federal program in the United States that provides financial assistance to individuals who are unable to work due to a disability. To qualify for SSDI benefits, individuals must meet certain eligibility standards set forth by the Social Security Administration (SSA). Several criteria such as earned work credits, medical disability and others are considered when entitling these payments to applicants.
Once eligibility is established, the SSA calculates the monthly SSDI benefit amount using a complex formula that takes into account your average lifetime earnings. Also, every year, the entity adjusts the monthly allotments to cope with inflation and costs of living. For 2024, the SSA announced a new increment that will benefit the SSDI and other programs’ recipients.
How are the SSDI payments and increments calculated
The first parameter taken into account is the Average Indexed Monthly Earnings (AIME): The SSA adjusts your past earnings for inflation and calculates your average monthly earnings during your highest-earning years. Then, it’s the Primary Insurance Amount (PIA), which is the base amount you’re eligible to receive at full retirement age (typically 65-67, depending on birth year). It’s calculated based on a progressive formula, where a certain percentage of your AIME is used to determine your PIA. Also, the SSA consider the age when you start receiving your benefits at: if you delay benefits past full retirement age, you may receive increased benefits compared to begin claiming them earlier.
SSDI benefits are subject to annual cost-of-living adjustments (COLA) to account for inflation. These adjustments are determined by changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). If there is an increase in the CPI-W, SSDI payments are adjusted accordingly to ensure they keep pace with the rising cost of living.
How much will I cash in SSDI benefits next year?
While inflation in the United States took a notable dip in June, reaching its lowest point in over two years, there was a slight uptick in the latest projection for the Social Security cost-of-living adjustment (COLA) in 2024.
In June 2023, the overall inflation rate increased by 3% compared to the previous year, as per data released by the U.S. Bureau of Labor Statistics on Wednesday. This marked the smallest year-over-year increase since the period ending in March 2021. Notably, the cost of shelter played a significant role in this increase, driven by the surging costs of housing and rentals, which has a pronounced impact on seniors living on fixed incomes.
According to projections by The Senior Citizens League, a non-partisan advocacy group for seniors, the 2024 Social Security COLA is expected to be 3% based on the June BLS data. This estimate represents a slight increase from the previous month’s projection of 2.7%.