The average Social Security Disability Insurance (SSDI) benefit has experienced a notable 18 percent increase over the past three years, underscoring its substantial financial significance for American workers. A recent analysis reveals that the national average benefit for SSDI beneficiaries in July 2023 stood at $1,486.60. This represents a significant upswing from the $1,258.91 recorded in July 2020, amounting to an impressive monthly increment of $227.69.
In light of these statistics, there is an imperative need for the American workforce to acknowledge the importance of their SSDI benefits under the Social Security umbrella. This encompasses the monthly income they may be entitled to and the invaluable support it offers for their reintegration into the workforce following a severe illness or injury. Now, qualifying for the SSDI benefits includes several requirements that must be strictly fulfilled, that we will tell you later.
SSDI Payments to Increase Soon: How Much Money Could You Claim Now?
The Social Security Administration (SSA) annually recalibrates benefit disbursements to account for changes in the cost of living. This recalibration hinges on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). For the 2023 Fiscal Year (FY), we observed a substantial 8.7% increase in cost-of-living adjustment (COLA) for the SSDI benefits.
The projected rise in the CPI-W is for the upcoming year is anticipated to be lower compared to the previous year. Consequently, it is probable that the COLA adjustment for 2024 will also be less substantial. Based on the latest assessment provided by The Senior Citizens League, a prominent non-partisan organization representing a significant demographic of senior citizens across the nation, there is an expectation that the Social Security program’s COLA adjustment for the year 2024 may amount to a 3% increase.
What are the requirements to qualify for SSDI benefits?
To qualify for Social Security Disability Insurance (SSDI) benefits, you must meet several requirements related to your disability and work history:
- Disability: You must have a medical condition that meets the Social Security Administration’s (SSA) strict definition of disability. This generally means that you’re unable to work for a year or more due to the disability. The SSA maintains a list of qualifying conditions in the Blue Book. If your condition is not listed, you can still qualify if you can prove that your condition is as severe as the ones listed. If you can’t meet or match a listing, you can still be approved for SSDI through a “residual functional capacity” or RFC evaluation, where the SSA assesses your physical and mental limitations to determine if they prevent you from working.
- Work Credits: You must have earned sufficient work credits through your employment history. The number of work credits you need depends on your age when you become disabled. Generally, you need 40 credits, 20 of which must have been earned in the last 10 years before becoming disabled. Younger workers may qualify with fewer credits.
- Earnings: If you’re working in 2023 and your earnings average more than $1,470 a month (or $2,460 if you’re blind), you generally cannot be considered to have a qualifying disability. If you’re not working or are working but not performing substantial gainful activity (SGA), your application will be evaluated based on your medical condition.
What Happens When COLA is Applied to Social Security Benefits?
When COLA is applied, it results in an increase in your SSDI and other Social Security benefits’ payable amounts. This means that you will receive a higher monthly payment to help cover your living expenses. COLA ensures that your benefits maintain their purchasing power, allowing you to keep up with the increasing prices of goods and services.
Now, you’ll think that the 3% COLA is fewer than previous years, and that’s correct. Well, yes and no, because it’s also good news: this means that the inflation for 2023 will be around that percentage, and your cost of living will stay closer to the current level. It’s worth noting that COLA may not always result in a substantial increase in your SSDI benefits, especially if inflation is low.
Reduced COLA Means Economic Stability
A decreased COLA means a noteworthy achievement for President Joe Biden’s federal administration in curbing inflation, a challenge that loomed large during the preceding administration, especially in the throes of the COVID-19 pandemic. The significance of this development transcends mere economic statistics, as it underscores a positive trajectory for the overall economy. A high COLA can trigger rapid price escalation, which, in turn, fosters financial uncertainty.
The implications of a reduced COLA extend to the sphere of Social Security beneficiaries. With inflation under control, their benefits experience less erosion in terms of purchasing power. This, in effect, stabilizes their standard of living, shielding them from the specter of a substantial upswing in the cost of living.
However, there’s one thing to consider her: not all applicants for the COLA adjustment will reap its benefits, and merely having Social Security does not guarantee its receipt. So, who stands to benefit from this adjustment? Individuals who have applied for retirement benefits post the age of 62 are eligible. Specifically, these individuals will receive adjustments for the years spanning between their 62nd birthday and the date of their benefits application. Conversely, those who claim Social Security immediately upon turning 62 may miss out on this adjustment.
For those currently receiving the average Social Security retirement benefit of $1,837 per month, the prospect of an additional $55 per month in 2024. This marks a substantial leap compared to the preceding two years, during which the adjustment climbed from 5.9% to 8.7%. In fact, it represents the most substantial percentage increase in benefits since the early 1980s.