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Early retirement benefits or SSDI at age 62?

Recently on our disability forum a user asked, “I am sixty-two years of age, and I am disabled. I have heard that getting SSDI benefits can be very tough. I need money now. I also know that I cannot get both disability and SSDI benefits at the same time. I am wondering if I should go ahead and file for early retirement benefits or whether it would be better to file for SSDI benefits?”


Disabled and cannot work

If you are sixty-two years of age and you have a severe mental or physical health condition which does not allow you to work you have the option of taking early retirement or filing for Social Security Disability Insurance (SSDI). You also have the option of just filing for SSDI or applying for both benefits at the same time.

What happens if I apply for SSDI and early retirement at the same time?

If you decide to apply for SSDI benefits and early retirement benefits together the main benefit is that you may be able to draw Social Security retirement benefits while you wait for your SSDI decision.

Now, let’s assume that you are denied for SSDI benefits. If this occurs you will continue to receive a reduced benefit for early retirement because you did not wait to draw SSA retirement until your full retirement age.

If, however, you are approved for SSDI benefits, assuming that your medical onset date (plus the five month SSDI waiting period) is prior to your month of entitlement to retirement benefits you will receive no reduction to your benefit. In fact, the SSA will retroactively make up the difference between the full disability amount and the early retirement amount received. (The difference between your early retirement payment at age 62 and your disability payment is currently 25% of your full retirement amount.)

What happens when I reach my full retirement age?

Now, another important consideration before deciding whether or not to apply for SSDI benefits and early retirement is to consider what will happen when you reach your full retirement age. Let’s say for example that you applied only for early retirement. Under this scenario, at your full retirement age your benefits will not increase. You will always receive your reduced retirement benefit.

If, however, you just filed for SSDI benefits and you were approved when you reached your full retirement age you would not receive both SSDI and retirement benefits but your SSDI benefit would simply convert to a retirement benefit with no reduction in payments.

Risk of applying for early retirement and SSDI at the same time

There is a risk if you decide to apply for early retirement and SSDI at the same time. Although this strategy can provide you with an income while you wait for the disability decision, if the SSA denies your case and you are not able to successfully appeal their decision, there is no guarantee you'll be granted disability benefits. In fact, if you are never able to win SSDI you could be stuck collecting less than your full retirement rate for the rest of your life.

Bottom Line:

Deciding whether or not to apply for SSDI benefits, early retirement benefits or both benefits at the same time is an important decision and should not be made without first considering all of your options.

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