Planning for retirement is a complicated process for anyone. In the US, retirement is reaching a peak level, with 10% of the workforce expected to retire in the next five years. Many are considering whether to wait until full retirement age – between ages 66 and 67 depending on year of birth – to receive 100 percent of their Social Security benefit, or if they can do so, begin retirement earlier.
Now imagine what could happen if a disabling illness or injury occurs before you’ve reached retirement age. Depending on the nature of the disability and how old you are when it occurs, you may need to explore retiring and applying for Social Security benefits sooner than expected.
For anyone at least age 62 , taking early retirement may be beneficial, but there are pros and cons to weigh as you assess the best plan for your financial situation.
What To Consider If You Become Disabled Before Fully Retired
If you become disabled before reaching your full retirement age, you will be faced with the following options for income replacement through the Social Security Administration:
- File for Social Security Disability Insurance (SSDI)
- File for Social Security Early Retirement (SSER)
In addition, you may have long-term disability insurance through your employer, or if applicable, personal savings which could also factor into your financial position. Evaluating what you will leverage, and how all available income replacement benefits interact, is important as you consider which Social Security benefits to pursue.
| Benefit Type | Qualifications | Medicare Eligibility |
| SSDI | 40 work credits (minimum) with 20 earned in previous 10 years | Yes, after first 2 years of SSDI benefit |
| Disabled for 12 months or longer | ||
| SSER | Be at least age 62 | No, must be age 65 |
| Sufficient work history based on 35 highest-earning years |
How Do I Qualify for SSDI?
To qualify to receive SSDI benefits, you must first meet these two criteria:
- Have a qualifying work history (meaning you worked in jobs that generated earnings subject to FICA taxes.
- Have a condition that meets Social Security’s definition of disability and prevents you from working for 12 months or longer
To determine if your work history satisfies the requirements, you will need to find out if you have enough work credits, and if you received them recently enough to be eligible for benefits. Work credits are what qualify you for Social Security; at most you can earn four credits a year, or one per quarter Most people need 40 work credits to receive benefits, and 20 of those should be earned in the 10 years prior to the year your disability began.
If you have a sufficient work history and your condition meets the definition of disability, then you will want to apply for SSDI benefits. If approved, you will receive the full benefit amount you would otherwise have received when retiring at full retirement age.
How Do I Qualify For SSER?
SSER benefits are available to those who have a sufficient work history and are at least age 62, the minimum age to qualify for benefits. Social Security assesses your benefit by looking at your 35 highest-earning work years and applies a formula to determine your monthly benefit amount.
Those who do qualify will see a reduction in their lifetime retirement earnings, however, and this amount will remain the same even after you reach full retirement age when it converts to your retirement benefit.
Social Security assesses your early retirement benefit amount by looking at how many months prior to full retirement age you begin receiving benefits and reducing your monthly payment by 5/9 of 1 percent for each month before full retirement age you file for benefits, up to the first 36 months. For anything more than 3 years prior to your full retirement the benefit drops 5/12 of 1 percent for each additional month.
Can I File For SSER If I’m Already Receiving SSDI Benefits?
No, once you receive SSDI, you will no longer be able to receive early retirement benefits. This is because you would receive the full amount you would otherwise obtain at full retirement age, and Social Security pays the larger of the two benefits.
However, if you are not yet approved for SSDI, you may want to apply for SSER since these approvals typically take much less time which can allow you to receive some income in the meantime.
If I Am Already Receiving SSER Benefits and Become Disabled, Can I Still Apply for SSDI?
Yes, if you are receiving SSER benefits you can still file for SSDI. If the claim is approved you will receive a higher benefit amount – not the full benefit you would have received if you had filed for SSDI initially, but more than your reduced early retirement benefit.
If you can prove your disability began before you took early retirement, Social Security will also pay up to 12 months of the difference between what you’ve already received and what you could have gotten under SSDI.
Can I Sign Up for Medicare While Receiving SSDI or SSER?
Those who receive SSDI benefits will qualify for Medicare coverage as well, but only after two years. You won’t have to wait to reach age 65 to qualify.
However, for those who are receiving SSER, you will not qualify for Medicare early. You will need to wait to sign up when you become eligible at age 65. You will receive the information on how to do so three months prior to the month in which you turn 65.
Evaluate Your Options With Help From The Experts
Taking stock of your personal situation and how to best protect your financial future is key to determining which Social Security benefits to pursue should you become disabled near retirement age. For help deciding on the best path forward, consider speaking to one of our client advocates today.
