Can You Eliminate the Early Retirement Penalty with Disability Benefits?

The age at which you can get your full Social Security retirement benefits varies depending on when you’re born, but it will generally be either 66 or 67. However, you can choose to begin receiving retirement benefits as early as age of 62. If you do this, you won’t get as much, though. The Social Security Administration will reduce upwards of 30 percent from your monthly benefits as a result. Although your payments will increase based on cost of living adjustments, this reduction will continue past the full retirement age.

However, if you reach age 62 and you can no longer work as a result of a disability, you may be able to begin receiving retirement benefits without having to worry about an early retirement penalty.

Avoiding an Early Retirement Penalty

First of all, if you’re under 62 and you’ve experienced a disabling condition that prevents you from working, then you won’t have to worry about retirement benefits or an early retirement penalty. Normal retirement age rules will apply in determining your disability benefits.

If you’re 62 years old and a disability prevents you from working, you might want to apply for both Social Security disability and retirement benefits. Reason one, it can take months for approval of your application for disability benefits. Reason two, you can begin collecting retirement payments while you wait to hear about your disability benefits.

Additionally, if your application goes through and the Social Security Administration makes a determination in your favor, then the early retirement penalty will disappear. In addition to increasing your monthly benefits, you’ll also receive money for the preceding months. However, the money collected will be less than your full disability benefit amount.

Potential Drawbacks

While there are advantages to applying for both benefit types, you should be aware of a few potential drawbacks. One of the major potential disadvantages is a denial of your disability claim. This means you will suffer an early retirement penalty.

There are other potential drawbacks, too. For instance, let’s say you have your application approved, but then the SSA determines that your disability benefit payments won’t start until after the date your early retirement benefits begin. While the early retirement penalty won’t be quite as big, your payment will still be permanently reduced.

Another important item to note is that it is much easier to prove a limiting disability if you are over 60. When you are in your 60s, you just have to prove that you are unable to do work that you did in the past.  For those under 50, you’ll have to prove that you can’t do any kind of work.

Get Answers to Early Retirement Questions

Your monthly payment amount will permanently reduce if you decide to take your retirement benefits before the full retirement age. However, if you can prove you are permanently disabled, you may be able to avoid an early retirement penalty. This all depends on the outcome of the Social Security disability insurance application process. For more advice, contact us anytime by calling 602-952-3200 or by using our LiveChat feature.

This is attorney advertising. SSDA, LLC is a group of attorneys that pursues claims for Social Security Disability benefits on behalf of its clients against the Social Security Administration. SSDA, LLC is in no way a part of the Social Security Administration. Further, the information on this blog is for general information purposes only. Nothing herein should be taken as legal advice. This information is not intended to create, and receipt or viewing does not constitute, a representative-client relationship.