If you happen to obtain Social Safety Incapacity Insurance coverage (SSDI), you’ve in all probability nervous in some unspecified time in the future about shedding advantages. In any case, the applying course of is notoriously lengthy and cumbersome. If you happen to’re nearing retirement age, these fears might change into extra pronounced. So what precisely occurs to your SSDI once you attain retirement age?
The excellent news is that you just gained’t lose these month-to-month checks. Learn on to be taught what occurs to Social Safety incapacity once you retire.
How Social Safety Incapacity Advantages Work
To qualify for Social Safety Incapacity Insurance coverage (SSDI), it’s essential to have an sickness or impairment that severely impacts your capability to work. You’ll additionally want to supply proof that your incapacity is both anticipated to final for at the least a yr or end in your demise.
Basically, SSDI advantages observe an identical components because the one used for Social Safety retirement advantages. Whether or not you’re receiving incapacity or retirement advantages, Social Safety makes use of your earnings report to reach at what’s generally known as your main insurance coverage quantity. (In Social Safety jargon, “main insurance coverage quantity” means 100% of your retirement profit.) Retirement advantages are calculated utilizing your highest 35 years of earnings. Incapacity advantages are based mostly in your common earnings earlier than you grew to become unable to work.
In a nutshell, Social Safety calculates your incapacity profit as in case you’d reached full retirement age. That’s once you get your main insurance coverage quantity, or 100% of your profit. For anybody born in 1960 or later, full retirement age is 67. However keep in mind: If you happen to meet Social Safety’s strict definition of disabled, it’s as in case you’re already at full retirement age. So let’s say you change into disabled at 55. Social Safety would nonetheless provide the profit you’d usually get at full retirement age.
Although you get your full Social Safety profit once you’re accredited for incapacity, the typical SSDI profit is about 21% decrease than the typical retirement profit. The explanation? Your earnings are inclined to rise over time, so disabled employees typically miss out on these higher-earning years.
Most SSDI recipients are eligible for Medicare 24 months after they qualify for incapacity advantages.
What Occurs to SSDI When You Attain Retirement Age?
While you attain full retirement age — which is 66 or 67, relying on once you had been born — your incapacity profit will mechanically convert to your retirement advantages. Because you’re already getting your full retirement profit, sometimes your month-to-month checks shall be for a similar quantity.
However lots of people take retirement advantages lengthy earlier than their full retirement age. You’re eligible for Social Safety retirement advantages as early as age 62, although you get a lowered quantity.
If you happen to’re getting incapacity advantages once you change into eligible for retirement advantages, it in all probability gained’t make sense to begin retirement advantages early. Since you’re already getting your full profit, your month-to-month checks would shrink. For instance, in case you switched to retirement advantages proper at age 62, your advantages could be about 30% decrease.
However in case you take Social Safety early after which change into disabled, you possibly can change into eligible for a better incapacity profit. Suppose you begin advantages at 62 however proceed working whereas accumulating Social Safety. You then change into in poor health at age 64. In case your incapacity declare is accredited, your profit would enhance to your full retirement profit.
As a result of the method of getting accredited for SSDI is usually so lengthy, many employees who change into disabled will take Social Safety early. Then, if their incapacity declare is accredited, they’ll swap to the upper quantity. Be cautious about pursuing this technique, although. In case your declare is denied, you’ll should dwell off of a completely lowered profit. It’s a good suggestion to speak to a Social Safety legal professional earlier than you proceed.
Can You Acquire SSDI and Social Safety on the Identical Time?
No. Social Safety offers you whichever is greater: your incapacity profit or your retirement profit, however not each. More often than not, these two advantages would be the identical. However there are a couple of circumstances the place one profit might be greater than the opposite.
For instance, in case you obtain employee’s compensation, you’ll typically qualify for much less cash from SSDI. In that case, you possibly can anticipate to obtain extra out of your retirement profit.
Can You Enhance Your Social Safety Profit When You Attain Retirement Age?
When you attain full retirement age and also you’re receiving Social Safety advantages, you possibly can droop your profit to get a bigger quantity later. This is applicable whether or not you had been already receiving advantages or in case your SSDI transformed to retirement advantages. You’ll earn 8% retirement credit for annually you delay. Then your profit will max out at age 70.
Suppose you’re receiving month-to-month incapacity funds of $2,000 monthly and also you flip 67, your full retirement age. You determine you possibly can afford to go one yr with out advantages in trade for bigger checks for the remainder of your life. You name Social Safety and voluntarily droop your profit. While you reinstate your advantages one yr later, you’d get $2,160 a month, plus any cost-of-living adjustment. You’d have the identical possibility in case you’re already taking retirement advantages.
When you attain full retirement age, the principles about working get much more versatile. In case your situation improves and also you change into capable of work, you gained’t face the stringent earnings limits that apply to SSDI advantages.
Social Safety additionally gained’t withhold a portion of your retirement advantages in case you work previous full retirement age.
The underside line is that your Social Safety profit will swap from incapacity to retirement once you attain full retirement age. Likelihood is, this shall be a non-event for you. Your verify quantity will keep the identical, and also you gained’t be any higher or worse off from it.
Robin Hartill is an authorized monetary planner and a senior author at The Nourishmoney. She writes the Expensive Penny private finance recommendation column. Ship your tough cash inquiries to [email protected]