Social Security Disability and Early Retirement Benefits
Most of my readers already know that they may opt to elect early Social Security Retirement benefits at age 62. Under this program, people who make the election to accept Early Retirement benefits receive a reduced amount of monthly benefit (as opposed to waiting until age 65, 67, or 70) in exchange for receiving a guaranteed amount now. However, most people do not know that if they become disabled at this time in their life they may apply for both Early Retirement and Social Security Disability at the same time. You may wonder why anyone would make such a choice, after all isn’t it easier to elect for early retirement and not have to worry about the disability process? While it is easier, it may not be in your best financial interests.
Lets use hard numbers as an example of what I am talking about. Assume that Jane Doe is entitled to $1,500.00 dollars per month in retirement benefits if she waits until her 65th birthday to retire. Lets also assume that if she takes early retirement, her benefits will be $1,200.00 dollars per month. Let’s say Jane becomes disabled on her 62nd birthday. Should she file for early Retirement, Disability or Both? The answer is both. If she applies for Early Retirement, she will start receiving her monthly benefit immediately so she will have a guaranteed $1,200.00 dollars a month she can depend on. Usually, it takes some time for the disability process to conclude that the applicant is disabled. However, when the disability is finally approved, Jane will be entitled to her full monthly benefit of $1,500.00. So what happens to those months where Jane received only $1,200.00 dollars while she was receiving Early Retirement? She will receive, in a lump sum payment, the $300.00 dollars per month she should have received, but did not because her disability application was pending. Note however, that the first five months of disability payments are eliminated (The rules require that benefits start only in the 6th month after the onset of disability). So for those five months Jane will not receive the additional $300.00.
So now you know that if, a loved one or friend is applying for Social Security, they are between 62 and 65 and they are disabled, they should apply for both Social Security Early Retirement Benefits and Social Security Disability Benefits.