Old age and Disability Benefits through Social Security
I just received an email asking me about the inter relationship between Social Security Disability and Social Security Old Age and Retirement benefits. The question was essentially as I am already receiving Old Age Retirement benefits, I assume I am not entitled to Disability benefits. To answer this question it is important to know a little about each of these benefits. Each is supposed to have its own fund of money. Thus if one is on disability the payment is from the Disability fund. If one is drawing Old Age retirement benefits those benefits come from that fund. Each fund has its own administrative procedures for processing and paying claims.
It is true that when a person is on disability prior to the age of 65, then the benefits will change to Old Age Retirement Benefits upon achieving the age of 65. However we must consider the effect of electing to receive Old Age Retirement benefits at age 62. As you know, if a 62 year old elects to take Old Age Retirement benefits they will receive them, but at a reduced monthly benefit amount. Now, if that same person becomes disabled between age 62 and age 65, that person may still apply for disability benefits even though they are receiving reduced Old Age Retirement benefits. So, why would an eligible person make such an election. The reason is that if that person is determined to be disabled, then their monthly benefits will increase to the same amount as if they had waited until age 65 to receive Old Age Retirement benefits. Therefore, there is a very real incentive to filing for disability if you are in fact disabled.
If you have a question about these issues, please give me a call to talk through your questions.