Reduced Retirement Benefits and Social Security Disability

Recently I spoke with an individual who had opted to take their reduced old age benefit upon turning 62. Subsequently, this person developed a debilitating condition that prevented them from working. The question was can the individual now apply for SSDI benefits even though they were receiving their reduced retirement benefit. Yes, you can, provided you apply up to six months prior to your full retirement age. For individuals born 1943-1954, the full retirement age is 66.

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The downside in this scenario is that if the individual is found disabled after he took his early retirement, his disability benefits are reduced by the number of months that he received the reduced retirement benefits. This reduction remains in effect even upon reaching full retirement age.

Likewise, if you are younger than 62, and have an application pending for SSDI, you may, at age 62, take your early retirement benefit while your claim is pending. If SSA finds you disabled before you took early retirement, you will get your full retirement amount as your disability benefit. For the months you collected your reduced retirement benefits, you will get the difference between your disability benefit and the reduced retirement benefit. Thereafter, you will receive your disability benefit.

If SSA finds you disabled after you started receiving your reduced retirement benefit, your disability benefit will be reduced by what SSA calls the reduction factor, which means you would collect less than your full retirement benefit.

If SSA finds you are not disabled, you will continue to collect your reduced retirement benefit even after reaching your full retirement age.

The decision to take early retirement has dramatic financial implications and you should consult with a financial planner to review your particular circumstances.

Social Security