Social Security disability benefits and Social Security retirement benefits are closely linked. So, if you’re nearing retirement age, you may wonder whether it is better to retire early or apply for disability benefits.
In general, it is advisable to apply for disability benefits instead of retiring early because disability benefits will provide you with the same amount of benefits as your retirement benefits when you reach full retirement age, whereas retiring early might result in a permanently reduced benefit.
Read below to find out more about whether you should retire early or go on disability.
Retirement vs. Disability Benefits: Eligibility Criteria
Before we go into comparing both of these benefits, it is essential to understand their eligibility criteria to find out which one you qualify for.
Disability Benefits Eligibility Criteria
Social Security Disability Insurance (SSDI) benefits aim to provide financial assistance to disabled individuals who are unable to work as a result of their condition. To qualify for Social Security disability benefits, the applicant must have a qualifying disability, i.e., their disability must prevent them from engaging in Substantial Gainful Activity (SGA). Furthermore, the qualifying disability must have lasted or be expected to last for 12 months or result in death.
The SSDI program has work credit requirements; you need to have worked long enough and contributed long enough to Social Security taxes to be considered eligible.
Since payroll taxes are paid into the Social Security fund, applicants must have worked in jobs where they contributed and paid Social Security taxes for a sufficient period of time in the most recent years in order to be eligible for the program.
Once you are approved for disability benefits, you will continue to be a beneficiary unless your condition gets better or you reach full retirement age.
Retirement Benefits Eligibility Criteria
Much of the technical criteria for Social Security disability and retirement benefits is the same; you need to have worked long enough in jobs that have paid into Social Security taxes.
The primary difference is the medical criteria; for retirement benefits, applicants need not have a qualifying disability, but they need to have reached 62 years of age.
Your monthly benefit will be calculated based on the total time you worked, the total earnings you made, and whether or not you plan to continue working when you reach the age of 62. Benefit payments are higher for people who hold off on retiring until full retirement age (which is currently 67 for those born after 1960).
You can increase your monthly retirement benefits by working until age 70 if you are able to do so. The retirement payments you start getting will keep coming in for the rest of your life.
Can You Get Disability and Retirement Benefits at the Same Time?
Combining retirement and disability benefits from Social Security will not increase the amount of benefits you receive. It is possible for a person to be eligible for both kinds of benefits at the same time under some circumstances; however, this would only be to bring the total amount of benefits they receive up to their maximum level; they would not be receiving double benefits.
If you become eligible for SSDI benefits before your full retirement age, you will get the same amount each month as you would have received had you started receiving retirement benefits at Full Retirement Age (FRA).
The FRA for those born in 1956 is 66 years, 4 months; for those born in 1957, it is 66 years, 6 months; and so on, increasing by two months per year until it reaches 67 for those born in 1960 or after.
In 2023, at age 62, you’ll be eligible for early retirement benefits worth only 70% of your full retirement benefits; your Social Security Disability Insurance amount will likely be higher. The disability benefit will change to a retirement benefit at FRA, so the monthly payment will remain the same.
It’s possible to get around this rule if you’re also receiving workers’ compensation or a “public disability benefit” from an official government job that exempts you from paying into Social Security. But these factors may limit your SSDI benefits to the point where you would be better off accepting the lower retirement benefit after you reach age 62.
Can I Qualify for SSI and Retirement Benefits at the Same Time?
Unlike Social Security Disability Insurance benefits, Supplemental Security Income (SSI) benefits do not turn into retirement benefits upon reaching retirement age. SSI is funded by federal taxes and aims to financially assist low-income senior citizens or disabled people.
However, in order to receive payments from SSI, you are required to apply for any and all additional financial benefits to which you may be entitled, including Social Security Disability Insurance and retirement benefits.
Another difference between SSDI and SSI is that you can receive SSI and retirement benefits concurrently. This means that once you reach retirement age, your monthly benefit amount will remain unchanged.
If you prefer to enlist help to navigate the process, a disability attorney may be able to guide you through this process and make sure that you obtain all of the benefits to which you are entitled as you get closer to retirement age.
Should I Retire or Go on Disability?
The best decision for you here will depend on whether you can afford to wait while the Social Security Administration processes your application.
But if you do have some savings and can get by for a few months while your application is getting processed, then it’s likely better to opt for Social Security disability benefits instead of early retirement.
On the other hand, if you cannot afford to wait the entire period while SSA processes your application, you may be better off retiring early.
It’s important to remember that if you opt for early retirement and then later decide to apply for disability benefits, you may have a much harder time getting approved or even finding a lawyer who would be willing to work on your case.
It takes less time to qualify for early retirement benefits than it does for disability benefits. So, if you’re certain that you have enough in savings to retire comfortably, even if your Social Security disability benefit gets lowered, then retiring early may be the quickest option to get benefits.
Keep in mind that if you retire early at 62, your benefits will be reduced. The full retirement age is between 66 and 67 years old. If you decide to retire before that age, you will see a reduction in your benefits.
If you decide to retire at age 62, you will receive 70% of your primary benefits amount (the amount you would have received in retirement benefits had you worked until your full retirement age).
On the other hand, getting approved for SSDI may take anywhere from six months to two years, but the extra benefits and Medicare benefits that come along may be well worth the wait. SSDI benefits are calculated as though you have already reached full retirement age.
In other words, instead of receiving 70% as you would if you retired early, you would receive 100% of your full retirement benefits. The SSDI payment stops at age 67, and the full retirement benefit begins. That ensures that you will continue to get the full amount indefinitely.
Knowing that retroactive pay is available upon SSDI approval is also beneficial. The method that is used to determine back pay is complicated. But in essence, back pay is the amount of money the government owes you while you are waiting for your application to get processed.
So, if you can afford to wait while your SSDI gets approved, you may be eligible for an extra benefit amount apart from your monthly benefits.
Applying for Disability Benefits as a Senior
It’s possible that if you apply for Social Security when you are older, you will receive a decision more quickly than if you applied when you were younger, but this is not a given.
When determining your eligibility for Social Security disability benefits, Social Security examiners will look at both your medical conditions and your employment history. In order to be considered permanently disabled, your medical condition must render you unable to perform the duties of any job.
It can be more challenging to demonstrate when you’re in your twenties that there are no jobs you could be trained for over the next four decades that would be appropriate to your medical condition.
When you’re close to retirement age, it’s considerably easier to demonstrate that your health prevents you from working.
SSA Application Processing Time
Getting approved for Social Security disability can be a lengthy process, even if your age works in your favor.
There are various variables that could affect the timeline, such as the severity of your medical condition, the response time of your medical sources, and whether or not your application is randomly picked for a quality review. After submitting your application, you may or may not hear back from the SSA within six months with their initial determination.
Decisions tend to be made more quickly for more serious conditions for which patients have visited multiple doctors or been hospitalized than for less severe conditions or those for which no medical record exists.
For instance, the approval process for someone with advanced cancer will be far smoother than it would be for someone with a bad back who has never been to a doctor for it.
If you disagree with the initial decision and want to appeal, you will need to submit a request for reconsideration. Six months is the typical time frame for a decision on a request for reconsideration. If your request for reconsideration is also denied, you will have to request a hearing before a judge, which can take anywhere from one to two years.
Any of these appeals can be submitted without the assistance of an attorney. If you receive a decision and promptly file an appeal yourself online at ssa.gov, you may be able to cut off approximately sixty days from the initial processing time compared to if you had done it by mail or in person.
If you submit your appeal by mail, it will still need to be entered in manually by Social Security employees, which might cause significant delays depending on the availability of personnel in your area.
How to Maximize Chances of SSDI Approval
Your chances of getting approved for SSDI may vary depending on different factors, but there are a few things you can do to maximize your chances of success.
Get Regular Medical Checkups
It is absolutely necessary to maintain regular appointments with your primary care physician regarding your health. Seeing your primary care physician before submitting your SSDI application is strongly recommended. Talk to them about your SSDI application.
You should also get medical documentation to back up your application. These may consist of, for example, the results of various laboratory tests. Include a note from your doctor detailing your current health and whether or not you’ll be able to return to work.
Present Substantial Medical Evidence
Most of the time, applications are rejected because there is not enough medical evidence. According to Social Security, a person with a disability is only eligible for disability benefits if their condition satisfies two criteria:
- Your medical condition(s) must prevent you from engaging in substantial gainful activity.
- Your medical condition(s) must last for, or be expected to last for 12 months or is expected to result in death.
It is required of you to provide evidence that satisfies these criteria. This may require a few different types of documentation. It will depend on the nature of your disability and the specifics of your case.
Include a detailed account of your health situation in your application for SSDI. Provide written proof of your past medical care, including records of surgeries, prescriptions, etc. These should back up not only the severity of your disability but also the time frame you’ve stated.
Get a Qualified Disability Lawyer on Your Side
Depending on your situation, the most important thing you can do to increase your chances of getting Social Security Disability Insurance benefits may be to hire an experienced disability attorney. Disability lawyers work on several SSDI cases throughout the year, are familiar with the SSA application process, how to navigate the system, appeals, etc., and will help you make the best case possible.
In conclusion, if you’re nearing retirement age, it’s probably best to go on disability rather than early retirement. If you’re still confused about what decision you should make, contact a disability lawyer or the SSA to get your case evaluated.
