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SSDI beneficiaries: when should you take your retirement benefits?

Disability benefits are an important resource for those who suffer with mental or physical impairments that keep them from holding down a job and supporting themselves and their families. For older folks who are looking at applying for Social Security disability benefits, it is important to understand how the retirement and disability benefits systems interact, since it may change how they pursue those benefits.

One beneficial aspect of these two systems is that a disabled worker can continue to collect their disability benefit through full retirement age with no reduction in the amount. On the other hand, non-disabled workers who apply for their Social Security retirement benefits between the age of 62 and their full retirement age must take permanently reduced benefits.

Upon reaching full retirement age, disability benefits automatically convert to a full retirement benefit. In effect, then, disabled workers are given their full retirement benefit four to five years before they reach full retirement age. This means that disabled workers can get 25 percent more than the non-disabled.

Whether or not one should take their retirement benefits early is not an easy question to answer, and depends on multiple factors, including what other sources of income are available, whether the individual in question is married, when his or her spouse begins to take his or her retirement benefits.

For instance, if a disabled worker has been married for at least one year, and if his or her spouse is collecting a retirement benefit or has applied for a retirement benefit, but suspended its collection, the disabled worker is able to receive what is called an excess spousal benefit between the age of 62 and 66, though it will be reduced. In cases of divorce, things get more complicated.

For those who are concerned about when to take their retirement benefits, it is important to work with an attorney knowledgeable on the subject. Doing so will ensure they make a decision that best fits their circumstances.

Source: PBS, "How to Maximize Social Security if Disabled and Other SS Questions," Paul Solman, February 18, 2013

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