As a general rule, you cannot receive Social Security Disability Insurance (SSDI) benefits and retire early at the same time. The purpose of the Social Security disability program is to provide benefits to individuals who are disabled and unable to work as a result of that disability, but they are too young to collect their retirement benefits.
There is an exception to this rule for workers in their fifties and early sixties who are forced to retire early as a result of their health problems. In addition to being the requisite age, you must meet three criteria to be approved for disability benefits and be able to retire early simultaneously: 1) if you are working, it must be at a level below the substantial gainful activity level; 2) you must have a disabling health problem that has lasted or is expected to last at least twelve continuous months; 3) you are still insured for the SSDI program.
The third factor requires some explanation. Workers age sixty and above are considered fully insured for the SSDI program if they have accumulated forty quarters of work credits, which is the equivalent of working for ten years; in contrast, workers age fifty and above only need seven years of work credits. To be considered “currently insured,” you must have worked at least five of the last ten years.
Although you do not have to apply for SSDI benefits before the date you were last insured, you do need to have become disabled before the date you were last insured. If you are close to the early retirement age of sixty-two, you should still consider applying for SSDI benefits for a number of reasons.
First, you are eligible for SSDI benefits backpay up to twelve months before the date of your application if you qualify. If Social Security Administration (SSA) determines that you are disabled, you will not be penalized for taking your retirement benefits early. Additionally, a disability freeze will limit the effect that zero income years will have on your benefits, and you will have access to Medicare after receiving SSDI benefits for twenty-four months.
What is a disability freeze? When you choose to retire early, SSA computes your retirement based on your total income for all the years that you worked. If you do not have enough work credits, SSA will still count the years you did not work and average zero income into your total working years; a zero income year could substantially affect how much money you will receive in future monthly retirement payments. Furthermore, retiring early means that your monthly retirement benefits are permanently reduced by a percentage that reflects how many more months you needed to have worked before reaching full retirement age.
If you opt to apply for SSDI benefits, however, your earnings record is frozen, and if you are unable to work and contribute to Social Security, those zero years will not reduce your ultimate benefit amount. SSA will exclude any zero income years of earnings from your period of disability.
If you are disabled and unable to work but are close to retirement age, contact an experienced Social Security disability attorney who can speak with you about all of your options and come up with a plan to make the most out of your retirement.