How Does Social Security Disability Affect Retirement Benefits?
Whether retirement is only a few years away or you’re a younger disabled worker planning for the future, understanding the impacts of receiving Social Security Disability Insurance (SSDI) is important. Find out what you need to know about disability and retirement, plus tips for managing your benefits, from the Social Security disability lawyers at SSDA USA.
What’s The Difference Between Disability and Retirement?
First up, let’s talk about the difference between disability and retirement benefits. Both are administered by the Social Security Administration (SSA), and both are programs designed to provide financial assistance to Americans who can no longer work. Both programs also have specific requirements beneficiaries must meet in order to qualify for benefits.
Qualifying for Disability Benefits
SSDI benefits are awarded to people whose medical condition meets the SSA’s definition of a disability—that is, a physical or mental health condition that prevents someone from working and engaging in Substantial Gainful Activity (SGA). In addition, the qualifying condition must have lasted or be expected to last for at least one (1) year (or alternatively, to result in that person’s death).
Unlike other Social Security programs such as Supplemental Security Income (SSI), qualifying for disability also requires that you have earned enough work credits. SSDI is funded by Social Security payroll taxes, so in order to be considered insured, you must have worked long enough, recently enough, and you must have paid Social Security taxes on your earnings. Once you qualify for disability, your benefits will continue unless your disability improves or until you reach retirement age.
Qualifying for Retirement Benefits
Retirement benefits, like SSI and SSDI, are a type of monthly payment paid to eligible Americans by the SSA. Once you have amassed enough work credits, paid into Social Security through federal taxes, and reached age 62, you can begin collecting retirement benefits. The amount of your monthly benefit depends on how much you worked, how much money you made, and whether you decide to keep working past the age of 62.
If you wait until your full retirement age (for those born after 1960, age 67), your monthly benefit will increase. And, if you are able to and decide to keep working until you are 70 years old, you can maximize your monthly retirement benefits. Once you begin receiving retirement benefits, you will continue to receive them for the rest of your life.
Can I Receive Social Security Disability AND Retirement Benefits?
In most cases, you cannot receive Social Security disability and retirement benefits at the same time, since SSDI benefits are meant for those who cannot work due to injury or illness. If you’re receiving retirement benefits, it is already implicit that you are no longer working. There is one exception to this rule, however.
If you take an early retirement at age 62 before applying for disability benefits, and are later found to have been eligible for disability during that time, the Social Security Administration will make up the difference between your early retirement benefits and your monthly disability benefits for those months that you received early retirement payments. Of course, you’ll have to submit adequate documentation that you took an early retirement because of your disabling condition.
It’s also worth noting that some individuals can draw monthly benefits from more than one Social Security program. For example, you may be able to qualify for both SSI and SSDI or retirement and SSI.
Is it Better to Retire Early or Go on Disability?
If you are approaching early retirement age and also have become disabled, you may be unsure whether you should take an early retirement or apply for disability until you reach full retirement age.
On the one hand, if you already know you have enough work credits to retire, the processing of starting your retirement benefits will be a lot easier than going through the laborious process of applying for disability.
On the other hand, you may not want to sacrifice the extra monthly benefits (as much as 30% more) you could get if you waited until full retirement or age 70 to begin collecting benefits. If you’re not too concerned about your financial stability, opting for early retirement might not seem like a big deal, especially if you have a pension through your employer or other types of retirement accounts like an IRA or 401K.
However, if you’re like many Americans, you may need all the help you can get from the Social Security Administration. In this case, it’s most likely better to get approved for disability benefits rather than take an early retirement and lose out on your hard-earned benefits. While it can be true that getting approved for SSDI can take time, effort, and patience, disability benefits can offer you a kind of flexibility that retirement can’t—especially if there’s a chance of your disability improving.
What Happens To My Disability Benefits When I Reach Retirement Age?
Once you successfully get approved for disability benefits, your monthly benefits should stay the same unless your disability improves, you start engaging in Substantial Gainful Employment (SGA), or you have a spouse whose income surpasses SSDI threshold levels. You can even continue to work part-time on disability or try out other options like a trial work period to see if you’re able to fully transition back into the workforce.
Making the switch from receiving disability payments to retirement benefits is simple—because for most beneficiaries, their monthly benefit stays exactly the same. This is because the SSA calculates your SSDI benefits as though you have already reached full retirement age, which is equal to 100% of your maximum benefit based on your lifetime earnings.
Get Help Qualifying for Disability Benefits
The truth is, applying for disability can be a long and sometimes frustrating process. Most first-time applicants are denied, and appeals can take months. However, this doesn’t mean you should give up hope. With the help of an experienced Social Security disability lawyer, you can increase your odds of being approved the first time and strengthen your claim should you need to go through the appeals process.
To find out the difference having dedicated representation on your side can make, contact us at Social Security Disability Advocates USA today. We’ll arrange a free, no obligation consultation with our legal team to review your disability claim and help you make the right decision for you and your family. Get in touch 24/7 by calling 602-952-3200, connecting with one of our LiveChat agents, or by filling out this form to request your complimentary case review.
