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When Does Social Security Disability Convert To Retirement?
The fact that only about one-third of the people who apply for Social Security disability get approved on their initial application for benefits makes holding on to them all the more important. One of the frequently voiced concerns, particularly from people approaching retirement age, is the effect it will have on their SS Retirement benefits. Will benefits stop? Will the monthly payment change?
Your best source for up-to-date and reliable information about disability benefits, including questions about the effect retirement has on them, is a New Jersey Social Security disability lawyer at MJ Ellis Disability Law. In the meantime, here is a closer look at the disability benefit programs administered by the Social Security Administration and what you can expect to happen with each of them when you reach retirement age.
What you may not know about Social Security disability
There are two disability programs that pay monthly benefits to individuals who are disabled and unable to work. Social Security Disability Insurance, or SSDI, is a program that you pay toward when you work and have Social Security taxes taken out of your paycheck. You also contribute by paying Social Security taxes on income earned through self-employment.
Paying Social Security taxes on your earned income for a long enough duration qualifies you to be “insured” and covered by SSDI as well as making you eligible for Social Security retirement benefits. You receive work credits depending on how much you earn each year from work or self-employment. One work credit is received for each $1,470 you have in earnings in 2021 with a maximum of four credits earned each year. The earnings you need for each work credit change each year.
You need to work 40 work credits to qualify for Social Security retirement benefits. However, the duration of work needed to qualify for SSD through the SSDI program depends on how old you are at the onset of a disability that prevents you from working. Someone who becomes disabled at a young age will need fewer work credits to qualify for SSDI benefits than would an older worker.
The other disability program, Supplemental Security Income, does not have a work component as an eligibility requirement. Benefits are available to blind or disabled adults and children and to the elderly who are at least 65 years of age and not disabled or blind.
SSI does not have a work requirement to qualify, but it does impose severe restrictions on the amount of income you may have from other sources and the value of financial resources you own. Financial resources, which include cash on hand and in the bank, may not exceed $2,000 in total value. Couples may not have resources valued at more than $3,000.
Retirement and SSD
If you receive benefits through the SSDI program, they convert to retirement benefits when you reach full retirement age. As a general rule, you should not see any change in the amount you receive each month.
Benefits payable through the SSI program are not funded through Social Security payroll taxes, so they do not convert to retirement benefits as does SSDI. However, if you qualify for both SSI and Social Security retirement benefits, you may see a change in your monthly SSI payment. The reason is that retirement benefits count as income that reduces the payment from SSI.
What is the full retirement age?
The full retirement age for anyone born after 1960 is 67 years of age, which is when benefits from Social Security disability convert to retirement benefits. You should not confuse the full retirement age with early retirement at age 62.
A word of caution about taking early retirement. The retirement benefit you receive by taking early retirement is less than what you get by waiting until reaching full retirement age. If you receive early retirement benefits and then apply for SSDI, you may receive full disability benefits only until reaching full retirement age when they convert to retirement benefits at the reduced amount because you took early retirement.
You should get advice from an SSD attorney at MJ Disability before filing for early retirement if there is a chance that you will also be applying for SSD or already have a disability application pending. If it can be proven that your disability began before early retirement, you may get the benefit of the government disregarding any years of low earnings through a disability freeze. The result may be an increase in the amount of your monthly benefits.
Get help with SSD
When you need advice, guidance, and skillful representation in all matters related to Social Security disability benefits, it pays to work with an experienced and knowledgeable Social Security disability attorney at MJ Ellis Disability Law. Contact them today for a free consultation and claim review.