In § 404.221, the Social Security Administration (SSA) outlines the process of computing your average monthly wage, a crucial factor in determining your primary insurance amount (PIA) for disability benefits.
https://www.ssa.gov/OP_Home/cfr20/404/404-0221.htm
Here’s a step-by-step overview of the average monthly wage computation:
- Determine your creditable earnings: Your average monthly wage is based on your wages, compensation, self-employment income, and deemed military wage credits that are creditable for Social Security purposes.
- Identify your computation base years: These are the years after 1950 and up to the year you become entitled to old-age or disability insurance benefits, or the year you die if you haven’t been entitled to these benefits.
- Calculate your elapsed years: Count the years from 1951 (or the year you turned 22, if later) until the year before you reached age 62, became disabled, or died before age 62.
- Determine your benefit computation years: Subtract 5 from your elapsed years to find your benefit computation years. These are the years with the highest earnings used to compute your average monthly wage.
- Calculate your average monthly wage: a. Total your creditable earnings in your benefit computation years. b. Divide the total by the number of months in your benefit computation years. c. Round the quotient down to the nearest whole dollar.
Understanding the average monthly wage computation process is essential in estimating your Social Security disability benefits. By following the guidelines in § 404.221, you can gain a better understanding of how your earnings history and years of work will influence your disability benefits.