How does Social Security work with disability benefits?

[#1]

Question

I just turned 62 and applied to start collecting my checks early. My first one will arrive next month. I am still working, but now my doctor is talking about putting me on disability due to some medical issues. So if that happens and my checks have already started, will the amount go up to the amount you would receive when on disibility or will it stay the amount collected at 62?

Answer

You perhaps need to talk to SSA before beginning your early retirement benefit.

Being declared disabled by the SSA, you would get 100% of your retirement benefit as your SSDI amount. Filing early (at 62, or earlier than your Full Retirement Age) for your old age SS retirement benefit, you will get a reduced retirement benefit because you are filing for it early — and it will continue to stay reduced forever by the calculated "reduction factor"..

If you get disability benefits — which are your full benefit — at your full retirement age, the amount will not change but the classification of it will change from SSDI to SSOAI (from Social Security Disability Insurance to Social Security Old Age Insurance).

However, you cannot just file for disability and get it. It has to be approved by the SSA — sometimes a very long process depending upon your medical condition and diagnosis.

Now certain medical conditions or being terminally ill can make this disability qualification pretty much a certainty. Here are the medical conditions which the SSA approves pretty readily. If your disease is not listed, you can submit it for consideration.

SSA: Compassionate Allowance Conditions

The thing about disability is the approval might take a while depending upon your condition. If one of the above Compassionate Allowance Conditions isn't met or you are not terminally ill, you might not get approval at all. Also keep in mind, depending upon your condition, they may also make a ruling to see if you could work again at some job that does not tax your health — although for people over 60, that is not too much of a deal.

Once the disability claim is approved, there is a lag time of about 5 months from the last time you had income from employment to begin disability benefits.

I am pretty sure there is a way to file for both at the same time and get the early retirement benefit started — then if you are finally approved for disability, there are some cost adjustments done by the SSA. You would need to work closely with the SSA to handle all of this so as to not get caught up in government complexity — need I say more? The calculations would be based on your paying back the early retirement amount to be offset against the (whatever) disability award and how far back they go with it. It is this part for which you need to visit your local SSA office and talk to a knowledgeable person about it. If you consider this, you might want to hold off on the early retirement application.

[mom1957]

Hi 

I too am 62 and right now I am out on a medical leave of abcense. I am collecting Short term disability at this time. If I am unable to return to work at 12 weeks I will lose my insurance. If I don't return at 16 weeks they no longer need to hold my job. 

My questions are

If I lose my insurance, what is available to me for insurance? I cannot afford the 300-400 insurances that I see on the website. My take home income is about 900.00 a week while working and after taxes. The short term is less. Would I qualify for Husky at that time? If  I was to go on Husky would I have to spend down my assets at that time before they would cover me?

If I can't return to work at all and file for the SS disability at 62, do they offer insurance? At that point would I have to spend down assets if I am still living at home?

Then same question if I don't qualify for disability and just retired at 62 would they help with insurance and would I have to spend down on assets

Maria

[co840]

When to start taking Social Security is a common topic. Suze Orman, as all "preachers" of financial planning, doesn't have to take responsibility for her recommendation in the recent AARP Bulletin article. She tells people to wait until 70 to start taking payments. She is not alone. What she doesn't say is "IF". There are a lot of ifs to consider. The vast majority of retirees who are receiving Social Security payments do so because they need it to live. Waiting to 70 is not an option. Something not mentioned is it will take someone living well into their 80s to simply break even, dollar for dollar, if they wait to start taking payments versus starting at normal retirement age or earlier. Overall health is critically important. Any chronic condition which may shorten one's life span is a red flag to not wait. A real alternative for those who can afford to wait is rarely discussed. What about taking the payments and investing them to augment future payments? That is clearly a hedge against dying before the break even point. Too many "planners" look at dollars as if they are all the same, forgetting that one dollar today is worth more than one dollar years from now. Like all areas of financial planning, there is no single rule to follow. If you are using a source for financial advice which says there is only one way to go - go somewhere else.