Options for Disability Benefits If You Elected Early Retirement
Social Security Disability Insurance (SSDI) benefits are designed to provide financial support for individuals who have to stop working because of a disabling impairment, and are not eligible for federal retirement benefits. Consequently, SSDI presupposes that a person was, until very recently, fully engaged in the working world, and, but for the disability, would be employed. However, there are individuals that fall into a gray area by taking early retirement, and electing to collect partial Social Security (SS) benefits before full SS benefits are available (the age for retirement varies by birth year, currently between ages 65 to 67). No one knows when or if a disability will occur, but the law does not allow a person to collect SS retirement and SSDI benefits at the same time. Thus, a person collecting his/her full entitlement of SS retirement benefits past age 65 is generally blocked from also claiming benefits under SSDI. However, individuals that fall into that window of early retirement, which starts at 62, do have the option of pursuing an SSDI claim if a qualifying disability is present. A discussion of how filing for SSDI benefits, while already collecting partial SS retirement benefits, will affect the monthly payout, and circumstances that are more likely to lead to an approval of SSDI claim, will follow below.
Early SS Retirement vs. SSDI Benefits
In order to capture early SS retirement benefits, a person must be willing to accept a reduced percentage of monthly benefits for the remainder of his/her life. Early SS retirement monthly benefits are typically 60 to 70 percent of the full SS retirement benefit amount. Through a complex formula, SSDI benefits are calculated based upon a percentage of an individual’s earnings throughout his/her working years, which typically results in a higher monthly benefit compared with early SS retirement benefits, and are ongoing once granted. Further, if an individual claiming a disability can prove the onset occurred before early retirement was taken, he/she would be eligible for retroactive SSDI benefits. The retroactive benefits would equal the difference between the early SS retirement benefit and what the person should have received from SSDI. Importantly, a person’s low-earning years due to disability would be disregarded under a disability freeze, and thus would not be calculated into the person’s disability benefit amount. If, on the other hand, SS determines the disability began after early retirement, there would be no retroactive payment, and the monthly benefit would merely convert to the SSDI amount. Finally, once full retirement age is reached, the monthly SSDI benefit converts to standard SS benefits, although the amount paid remains the same.
Factors that Increase Chances of Approval
Obtaining approval for SSDI benefits is no easy task, and can take years before success is achieved. As a consequence, someone suffering from a disability that is eligible to take early retirement will often take this option as he/she pursues a disability claim. Thus, if early retirement is a direct result of a disabling impairment, this factor works in favor of approval for SSDI benefits. Further, health issues that arose or worsened following retirement also contribute toward higher odds of being found disabled. A lack of gainful employment, less than $1,170 per month under the current income limits, is further evidence of disability, and a requirement to qualify for SSDI benefits.
One final point – substantial financial gains from SSDI benefits versus SS benefits diminishes the closer one gets to his/her retirement age. Thus, applying for SSDI benefits as early as possible is the best method of maximizing the monthly payout.
Contact a Disability Insurance Attorney
Dealing with a disability is overwhelming, and the complexities of getting SSDI benefits do not make your situation any easier. Talk with a disability insurance attorney about your claim to learn your chances of success, and how to build the strongest possible case. Farrell Disability Law has decades of experience helping individuals get the money they need and deserve, and serves clients in the Jacksonville area. Contact us for a free consultation.