Many workers approaching early retirement age (62 years old) face the difficult question of whether or not to take retirement benefits at 62 or wait until full retirement age at 66. If you take the benefit at 62, it will be reduced by 30%, a hefty sum living on a fixed income. Workers who stop working for a physical or mental condition, however, may have another option: applying for SSDI.

SSDI Benefits Exceed Early Retirement Benefits

There are two principal benefits to gaining SSDI approval in lieu of accepting early Social Security Retirement. The first is the amount of benefits you will receive. Generally, the amount you could receive for SSDI benefits is similar to your full retirement benefit and higher than the early retirement benefit. If you are approved for SSDI benefits, you will receive SSDI benefits until you hit full retirement age, at which time your benefits will be converted to Social Security Retirement benefits, without any reduction for taking the benefit early. Importantly, a finding that you have become disabled will freeze in time the period Social Security uses to calculate your retirement amount. This means that Social Security will not count against you (for benefit calculation purposes) the years of lower earnings after becoming disabled.

SSDI Approval May Speed Medicare Eligibility

The second principal benefit of being approved for SSDI instead of taking early retirement is the potential of Medicare coverage prior to your 65th birthday. If you are approved for SSDI, you become eligible for Medicare 29 months after the date you were found disabled (two years from your first eligibility for benefits)..

For illustration, take an individual who turned 60 on January 1, 2015. If this individual stops working at 60, they become eligible for early retirement at 62, and will not become eligible for Medicare until they are 65, January 1, 2020. However, if this same individual is approved for SSDI benefits, with a finding that they became disabled on their 60th birthday, January 1, 2015, they become eligible for SSDI benefits after the 5 month waiting period, in June of 2015. Two years later, in June of 2017, they also become eligible for Medicare. In this example, the SSDI approval allows for Medicare eligibility two and a half years prior to turning 65.

SSDI Applications: Timing is Critical

It is important not to delay in applying if you stopped working due to a physical or mental condition. SSDI requires that you be found to have become disabled within 5 years of last paying into Social Security, referred to as your “date last insured” (DLI). Although you can apply for benefits after your date last insured, such claims present obstacles which can cause the claim to be denied. Additionally, the SSDI application and appeals process is slow and can take years to complete. Getting the process started soon reduces the period where you may be without income.

SSDI After Early Retirement?

If you have already accepted early retirement, you may still apply for Social Security Disability benefits. If you are found to have been eligible for SSDI, Social Security will pay back benefits of the difference between your lower early retirement amount and the SSDI amount. You will also be eligible for Medicare and ongoing benefits to full retirement age as described above.

If you stopped working because of a physical or mental condition, an attorney at Hawks Quindel can evaluate (without charge) whether you may be a good candidate for SSDI. We frequently help individuals apply for and appeal benefit denials, even after they have accepted early retirement benefits. The difference in payment amounts over a lifetime between early retirement and full retirement benefits are very significant. Equally important is health care coverage during these years. Having the input of an attorney can be invaluable when making these important retirement decisions, and we are happy to help.

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David Zoeller