Does SSDI Stop When You Become Eligible for Social Security?

For those who obtain Social Safety Incapacity Insurance coverage (SSDI), you’ve in all probability anxious sooner or later about dropping advantages. In spite of everything, the applying course of is notoriously lengthy and cumbersome. For those who’re nearing retirement age, these fears could turn out to be extra pronounced. So what precisely occurs to your SSDI while you attain retirement age?

The excellent news is that you simply received’t lose these month-to-month checks. Learn on to be taught what occurs to Social Safety incapacity while you retire.

How Social Safety Incapacity Advantages Work

To qualify for Social Safety Incapacity Insurance coverage (SSDI), it’s essential to have an sickness or impairment that severely impacts your potential to work. You’ll additionally want to offer proof that your incapacity is both anticipated to final for at the least a yr or lead to your demise.

Basically, SSDI advantages comply with an analogous system because the one used for Social Safety retirement advantages. Whether or not you’re receiving incapacity or retirement advantages, Social Safety makes use of your earnings file to reach at what’s often known as your main insurance coverage quantity. (In Social Safety jargon, “main insurance coverage quantity” means 100% of your retirement profit.) Retirement advantages are calculated utilizing your highest 35 years of earnings. Incapacity advantages are based mostly in your common earnings earlier than you grew to become unable to work.

In a nutshell, Social Safety calculates your incapacity profit as should you’d reached full retirement age. That’s while you get your main insurance coverage quantity, or 100% of your profit. For anybody born in 1960 or later, full retirement age is 67. However bear in mind: For those who meet Social Safety’s strict definition of disabled, it’s as should you’re already at full retirement age. So let’s say you turn out to be disabled at 55. Social Safety would nonetheless provide the profit you’d usually get at full retirement age.

Even supposing you get your full Social Safety profit while you’re accepted for incapacity, the typical SSDI profit is about 21% decrease than the typical retirement profit. The explanation? Your earnings are inclined to rise over time, so disabled employees typically miss out on these higher-earning years.

What Occurs to SSDI When You Attain Retirement Age?

Once you attain full retirement age — which is 66 or 67, relying on while you had been born — your incapacity profit will robotically convert to your retirement advantages. Because you’re already getting your full retirement profit, sometimes your month-to-month checks shall be for a similar quantity.

However lots of people take retirement advantages lengthy earlier than their full retirement age. You’re eligible for Social Safety retirement advantages as early as age 62, although you get a decreased quantity.

For those who’re getting incapacity advantages while you turn out to be eligible for retirement advantages, it in all probability received’t make sense to start out retirement advantages early. Since you’re already getting your full profit, your month-to-month checks would shrink. For instance, should you switched to retirement advantages proper at age 62, your advantages can be about 30% decrease.

However should you take Social Safety early after which turn out to be disabled, you may turn out to be eligible for the next incapacity profit. Suppose you begin advantages at 62 however proceed working whereas amassing Social Safety. You then turn out to be ailing at age 64. In case your incapacity declare is accepted, your profit would improve to your full retirement profit.

As a result of the method of getting accepted for SSDI is usually so lengthy, many employees who turn out to be disabled will take Social Safety early. Then, if their incapacity declare is accepted, they’ll change to the upper quantity. Be cautious about pursuing this technique, although. In case your declare is denied, you’ll need to stay off of a completely decreased profit. It’s a good suggestion to speak to a Social Safety lawyer earlier than you proceed.

Can You Gather SSDI and Social Safety on the Identical Time?

No. Social Safety gives you whichever is greater: your incapacity profit or your retirement profit, however not each. More often than not, these two advantages would be the similar. However there are just a few circumstances the place one profit might be greater than the opposite.

For instance, should you obtain employee’s compensation, you’ll typically qualify for much less cash from SSDI. In that case, you may anticipate to obtain extra out of your retirement profit.

Can You Enhance Your Social Safety Profit When You Attain Retirement Age?

When you attain full retirement age and also you’re receiving Social Safety advantages, you may droop your profit to get a bigger quantity later. This is applicable whether or not you had been already receiving advantages or in case your SSDI transformed to retirement advantages. You’ll earn 8% retirement credit for annually you delay. Then your profit will max out at age 70.

Suppose you’re receiving month-to-month incapacity funds of $2,000 per thirty days and also you flip 67, your full retirement age. You determine you may afford to go one yr with out advantages in change for bigger checks for the remainder of your life. You name Social Safety and voluntarily droop your profit. Once you reinstate your advantages one yr later, you’d get $2,160 a month, plus any cost-of-living adjustment. You’d have the identical choice should you’re already taking retirement advantages.

When you attain full retirement age, the foundations about working get much more versatile. In case your situation improves and also you turn out to be in a position to work, you received’t face the stringent revenue limits that apply to SSDI advantages.

Social Safety additionally received’t withhold a portion of your retirement advantages should you work previous full retirement age.

The underside line is that your Social Safety profit will change from incapacity to retirement while you attain full retirement age. Likelihood is, this shall be a non-event for you. Your verify quantity will keep the identical, and also you received’t be any higher or worse off from it.

Robin Hartill is a licensed monetary planner and a senior author at The Penny Hoarder. She writes the Pricey Penny private finance recommendation column. Ship your tough cash inquiries to [email protected]