Why Is My Social Security Disability (SSDI) So Low?

Social Security Disability Insurance (SSDI) provides financial assistance to individuals unable to engage in substantial gainful activity due to a severe medical condition. While SSDI provides a safety net, many recipients find their monthly benefit amount lower than anticipated. Understanding the factors influencing SSDI payments clarifies why benefits may not meet initial expectations. This article explores how benefits are calculated and identifies common reasons for lower payment amounts.

How Your SSDI Benefit is Determined

Your Social Security Disability Insurance (SSDI) benefit is based on your lifetime earnings covered by Social Security. The calculation begins with the accumulation of work credits.

To qualify for SSDI, you must earn a certain number of work credits. These credits accumulate through your wages or self-employment income, with individuals earning up to four credits each year. For 2025, one work credit is earned for each $1,810 in wages or self-employment income, reaching the maximum four credits at $7,240 in a year.

While 40 credits are generally required for eligibility, 20 must be earned in the 10 years before your disability began. Younger workers may qualify with fewer credits based on their age at disability onset.

Once eligibility is established, your Average Indexed Monthly Earnings (AIME) determine your benefit amount. The Social Security Administration (SSA) calculates your AIME by indexing your past earnings to account for changes in general wage levels over time. The SSA then takes your highest 35 years of indexed earnings, sums them, and divides that total by the number of months in those years to arrive at your AIME.

Your AIME determines your Primary Insurance Amount (PIA), your full monthly benefit before any reductions. The PIA is determined using a progressive formula with “bend points,” specific dollar amounts that apply different percentages to segments of your AIME. For example, a high percentage applies to the lowest portion of your AIME, a lower percentage to the middle, and an even smaller percentage to the highest. This progressive structure means lower earners receive a higher percentage of their average earnings back as benefits compared to higher earners.

Common Reasons for Lower Benefits

Even after your Primary Insurance Amount (PIA) is calculated, several factors can reduce the monthly Social Security Disability Insurance (SSDI) payment you receive. These reductions prevent individuals from receiving combined benefits that exceed their prior earnings. Understanding these offsets clarifies why benefits may seem lower than expected.

One common reason for a reduced SSDI payment is the receipt of Workers’ Compensation or other public disability benefits. If you receive Workers’ Compensation or other public disability benefits (such as state temporary disability or civil service disability), your SSDI benefit will be reduced. Federal law stipulates that the combined total of your SSDI and these other public disability benefits cannot exceed 80% of your average current earnings before disability. If the combined amount exceeds this 80% threshold, your SSDI benefit will be reduced to bring the total within the limit. This offset continues until you reach your full retirement age.

The “family maximum” rule is another factor that can reduce SSDI payments. Social Security sets a limit on the total monthly benefits paid to a disabled worker and their eligible family members (such as a spouse and children) based on the worker’s earnings record. For SSDI recipients, this family maximum ranges from 100% to 150% of the disabled worker’s Primary Insurance Amount (PIA). If the sum of individual benefits for the worker and all eligible family members exceeds this family maximum, the family members’ benefits (but not the disabled worker’s) will be proportionally reduced until the total falls within the maximum limit.

Historically, the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) reduced Social Security benefits for some individuals. The WEP reduced Social Security benefits for individuals who received a pension from employment not covered by Social Security (meaning no Social Security taxes were paid on those earnings). Similarly, the GPO reduced Social Security spousal or survivor benefits for individuals receiving a government pension from non-covered employment. However, the Social Security Fairness Act, signed January 5, 2025, eliminated both the WEP and GPO for benefits payable from January 2024 onward. These provisions no longer reduce benefits for affected individuals. Those whose benefits were previously reduced began receiving adjustments and potentially retroactive payments starting in early 2025.

Other Factors Affecting Your Payment

Beyond the initial calculation and specific benefit reductions, other factors influence the net amount of Social Security Disability Insurance (SSDI) you receive. These include the taxation of benefits and annual cost of living adjustments.

Taxation of Benefits

Depending on your total income, a portion of your SSDI benefits is subject to federal income tax. The Internal Revenue Service (IRS) uses a “combined income” formula for taxability, including your adjusted gross income, any nontaxable interest, and half of your Social Security benefits.

For 2025, if your combined income is between $25,000 and $34,000 for an individual filer, up to 50% of your benefits may be taxable. If your combined income exceeds $34,000, up to 85% of your benefits could be taxed. For those filing jointly, the thresholds are higher: between $32,000 and $44,000 for up to 50% taxation, and above $44,000 for up to 85% taxation. This taxation reduces the spendable income from your SSDI payments.

Cost of Living Adjustments (COLA)

The Cost of Living Adjustment (COLA) impacts the value of your benefits over time. COLAs are annual increases applied to Social Security benefits, including SSDI, designed to help benefits keep pace with inflation. These adjustments are based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) and are announced in October each year, taking effect in January. For example, the COLA for 2025 is 2.5%. While COLAs aim to preserve purchasing power, an individual’s personal cost of living may rise faster than the general inflation rate measured by the CPI-W, potentially leading to a perception that benefits are not keeping pace with their actual expenses.