How Much Will I Make on Disability?

How Much Will I Make on Disability?

You’ll see this question online in other blogs.  Most of the time it will be phrased differently though.  Instead of saying, “how much will I make on disability,” attorneys or agencies will phrase it in the form of “what will my compensation be if…”  But whether you’re deciding to file a claim, or deciding to file an appeal to denial, the financial consideration is very much a piece of information you need to know.  For that reason, let’s dispense with couched language and talk frankly about Social Security Compensation for a bit.

Social Security Compensation (SSI)

Social Security Compensation for SSI is fixed at a standard rate that is established every year.  Most years there is a cost of living (COLA) increase.  In recent history, the payout for an individual who is receiving this benefit is roughly 20% of the average wage.  Average Wage Index.  For couples, the compensation hovers around 30% of the average individual wage.

Note, a married couple, both receiving SSI will receive about 75% of what two unmarried people would be receiving.

Monthly Social Security Compensation compared to average monthly compensation

Social Security Compensation (Disability)

Social Security Compensation for SSDI is a little harder to peg because it is based on your wage earning history.  There are online calculators to help you figure out what your award might be.  Here’s one from the Social Security Administration.  For the sake of discussion, we did the research and found that the Social Security Administration paid out a monthly average of $1165 in 2016 to recipients of SSDI.  That is about $13,980 per year or 30% of the Average Monthly Income.  Of course, higher or lower earnings history will skew this number up or down in your claim, this is an average.

So here’s the flat truth on this.  You are not going to be making a lot of cash on these benefits.  But, the cash benefits you will receive may be the difference between zero income and some income and that cannot be understated.

Another factor to consider is that succeeding in pursuing these benefits has more benefit than the face value of the monthly cash in the bank.  The financial benefit at the end of the road is only part of the overall picture.

Compensation in Forms Other than Cash

Here’s an example..student loans

Student loan debt will not go away.  It will chase you the rest of your life.  You can’t typically discharge or get forgiven of these loans.  Even though bankruptcy.   In addition to this, student loan debt is also growing.  Depending on how you read the data, between 17-25% of those that owe student loan payments are either past due or in default.

Among those that are TBD and receiving a social security award, the default rate is 46%.  There seems to be a link between total disability and ability to pay down student loan debt.  This may be related to the monthly compensation rates?

If you are found to be totally and permanently disabled (TPD) you can apply to have your federal student loan debt discharged.  In a real-life scenario, this would free up a couple of hundred dollars per month.

This benefit, and others like it, need to be factored into the discussion of how much you will make on disability (SSI/SSDI).

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