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What is the impact of disability determination on early retirement benefits

One in six Americans, according to the Social Security Administration, currently receives some sort of Social Security benefits. In 2013, this means that 58 million people were involved in the program and that $821 billion in benefits was paid. For the average retired person, the average monthly benefit is over $1,200.

The issue of when to claim Social Security retirement benefits is one that is not irrelevant to Social Security disability. As our readers may know, the earliest age one can claim retirement benefit is age 62. Those who choose to claim their retirement benefits before full retirement age will have their benefits reduced. Full retirement age is 65.

Someone who is receiving disability benefits through Social Security will automatically have those benefits converted to retirement benefits at full retirement age. At that point, there will be no limit in the beneficiary's earnings.

Those who want to pursue early retirement benefits and disability benefits at the same time should realize that there could be an impact on one's Social Security payments if one is ultimately found not disabled.

Those who are determined to be eligible for Social Security Disability before full retirement age and whose payments start retroactively prior to the date they began to receive reduced retirement will have their early retirement application effectively withdrawn. Social Security will then pay the difference between the reduced retirement payment and the full Social Security benefit for each month one has already been paid. After that, one will receive full payment for each month going forward. 

Source: tctimes.com, "Social Security: $821 billion paid in 2013," May 15, 2013.